In spite of Andres Manuel Lopez Obrador’s (AMLO) quasi-nationalist speechifying, and consistent claims that he will revise Mexico City’s multi-billion airport project, Moody’s upgraded Mexico’s government ratings outlook on 11 April from negative to stable listing three key factors:

• ‘Risks to growth stemming from the NAFTA [North America Free Trade Agreement] renegotiation are receding as engagement between members of the treaty has remained solid despite a challenging negotiation process.
• Structural reforms adopted since 2013 have increased the Mexican economy’s resilience to shocks, contributing to favourable fiscal results and a moderate decline in public sector indebtedness.
• Moody’s view that the probability is low that the next administration, through a sharp change in policy, weakens economic and fiscal trends.’

The Moody’s upgrade, which improves Mexico’s sovereign risk, also signalled support for AMLO who is the leading candidate in all the opinion polls to win the 1 July presidential election.

Moody’s decision further endorses AMLO, but it sets a solid forecast for his imminent victory in spite of the volatility caused by NAFTA, and his inability to undo President Peña Nieto’s set of structural reforms during AMLO’s administration. An AMLO victory would mean fiscal and policy continuity which would both prevail given the congressional majority that is currently held by the governing Partido Revolucionario Institucional (PRI) and its allies.

One of AMLO’s campaign promises is to freeze petrol price and no more increases like those that have become commonplace over the past decade. The move coincides with one of AMLO’s key campaign pillars, which is to pledge to low fuel prices by increasing the capacity of the incapacitated state-owned refineries and build at least two new refineries before the end of his presidential term.

But according to Energy Secretary, Pedro Joaquin Coldwell, gasoline prices have been ‘softened’ but that they cannot be frozen. He said that public finances could no longer subsidise fuel in the same way that most of the previous administrations have kept prices artificially low in spite of declining national fuel production. Mexico currently meets its burgeoning fuel demand with imports from the US.

Recurrent price increases (known as ‘gasolinazos’) have been common during the past decade but even more so during President Peña Nieto’s administration. AMLO — who has been a fierce critic of both the PRI and Peña Nieto — has used this anti-gasolinazo rhetoric to improve support.