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Mexico Is Struggling To Help Businesses During The Pandemic

AILSA CHANG, HOST:

To Mexico now, where that country's president is facing calls to do more to prop up businesses hurt by the coronavirus shutdown. But with the economy now in recession, he has no plans to bail out major firms. And he insists on cutting public sector spending. NPR's Carrie Kahn reports.

RAYMUNDO ORTEGA: (Playing guitarron).

CARRIE KAHN, BYLINE: Raymundo Ortega (ph) leans on a lamppost, strumming his guitarron in Mexico City's famous Garibaldi Plaza. The rest of his band no longer shows up.

ORTEGA: (Singing in Spanish).

KAHN: Usually, the esplanade's teeming with mariachi bands waiting to get picked up for a party or play a song for tourists.

ORTEGA: (Speaking Spanish).

KAHN: "I've only played a couple of songs in the last two months," says Ortega, who says he and his fellow musicians have gone broke since Mexico went on lockdown last month to curb the virus. Ortega, who is 75, says at least he still has his government pension, for which he thanks President Andres Manuel Lopez Obrador.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT ANDRES MANUEL LOPEZ OBRADOR: (Speaking Spanish).

KAHN: "We give preference here to the poor," says Lopez Obrador when asked for details about his plan to help Mexico's economy. The young and elderly will be taken care of through existing programs, he said. And small businesses will get new loans. In all, 70% of Mexican households will get help, Lopez Obrador insisted. What do the other 30% get?

(SOUNDBITE OF ARCHIVED RECORDING)

LOPEZ OBRADOR: (Speaking Spanish).

KAHN: "They get to live in a country with the rule of law, with peace and no corruption," he says - the promises Lopez Obrador says he's fulfilling since his landslide victory last year. And he's taking his pledge for a leaner government to new levels. Last week, he slashed salaries, eliminated some government departments and canceled Christmas bonuses.

VALERIA MOYE: There is no fiscal plan whatsoever.

KAHN: Bolevia Moye (ph), an economist at a Mexico City think tank, says Lopez Obrador must inject more capital into the economy. As conservative governments around the world increase spending, Mexico's populace is bent on cuts. The president is also betting several pet infrastructure projects will create new employment. But Moye says Lopez Obrador must do more to keep workers in their current jobs. A few million loans to small businesses won't do it, especially since they're only about a thousand dollars.

MOYE: They're not going to be nearly enough for the size of the crisis that Mexico is going to face in the next couple of months.

KAHN: Rafael Hernandez (ph), who has 10 employees in his ice cream cone factory, says that might work for an owner who has only one or two workers but not for him.

RAFAEL HERNANDEZ: (Speaking Spanish).

KAHN: He says he'll try to ride out the crisis without a loan. He doesn't feel comfortable using the Internet or going outside to a bank and getting exposed. Mexico's central bank has stepped in and lowered interest rates. And large Mexican businesses have asked the Inter-American Development Bank for loans, too. Both moves angered Lopez Obrador, who insists Mexico cannot take on debt. He says past experience has shown only the rich get richer with bailouts. Daniel Kerner of the Eurasia Group calls Lopez Obrador stubborn, a politician whose MO seems to be...

DANIEL KERNER: I'm just going to do that regardless of what other people think - and I think worryingly - regardless of what their circumstances are.

KAHN: Some analysts say Mexico's economy could contract by as much as 10% this year. Businessman Jaime Mauro (ph), who employs 120 workers at his paint company, says the president needs to listen to everyone if Mexico is to survive this crisis.

JAIME MAURO: (Speaking Spanish).

KAHN: "This government has left business out in the cold," he says, "and to fend for ourselves." Carrie Kahn, NPR News, Mexico City. Transcript provided by NPR, Copyright NPR.