Mexico President Vicente Fox recently outlined his economic goals for 2006. This is a summary:

      •Reform the ISSSTE pension system. Currently, the pension system for government employees works under the pay-as-you-go scheme. Pensions of retired workers are financed by active employees, so the viability of the system depends on its demographic structure. It should be pointed out that life expectancy in Mexico went from 64.4 years in 1975 to 75.3 years in 2000, while the average retirement age among those insured by ISSSTE dropped from 61.9 to 55 years in the same period. This increased the average time span a retired employee receives a pension from 2.5 years in 1975 to 19 years in 2000, while the number of active workers per retired worker fell from 20 to 5.2.

      •Labor Market Reform. The values of a new labor culture will favor an increase in productivity and competitiveness. A more transparent regulatory framework with greater certainty in the labor relationship and the flexibility needed for the better development of productive activities must be set up.

      •Budget Process. Various developments require the modernization of the legal framework which regulates the approval and execution of the federal budget. As part of this modernization process, it is necessary to formalize the communication and coordination mechanisms between the legislative and executive branches. Further, it is necessary to establish clear rules for the determination of key parameters in the budget, such as the reference price for the Mexican oil mix and to guarantee the execution of approved government programs.

      •Energy Reform. The energy sector is crucial for economic development, as it produces key inputs for the expansion of productive activity. An important part of the proposed restructuring of the energy sector is the improvement of the management and organizational structure of state-owned enterprises through a reform of their corporate governance regimes. This reform will increase their value and efficiency, with the consequent contribution to the development of Mexico.

            •Securities Law. The financial reforms approved during the last few years have encouraged development of the domestic financial markets and a greater availability of credit for Mexican businesses, along with investment alternatives. However, these markets have not developed to their full potential; it is possible to increase the financing options for medium-sized businesses through the development of venture capital markets...

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