Mexico’s proposed judicial reforms may hurt investment climate: Fitch

By Ovunc Kutlu

ISTANBUL (AA) - The proposed judicial reforms in Mexico may negatively affect the country's corporate investment climate, according to Fitch Ratings on Wednesday.

The judicial reforms could have an adverse effect on the investment appetite and business environment of non-financial corporates if their implementation impedes the autonomy and quality of the judicial system, the rating agency said in a statement.

However, Mexican corporations are expected to show resilience amid the uncertainty posed by the recent election, as their credit metrics are likely to remain within rating expectations, it added.

"The June 2024 general election results signal broad policy continuity and solidify the MORENA party’s extensive political support," it said. "Results suggest that MORENA, along with its allies, may secure enough legislative support to pass constitutional amendments."

Fitch said the reforms, which are likely to be passed in September, are likely to increase fairness and efficiency of judicial process, and to eliminate the perceived corruption of the courts.

"We believe these reforms overall would negatively affect Mexico's institutional profile, but it is too early to gauge the potential severity prior to approval and implementation," said the statement.

"The potential for imminent economic, regulatory and judicial reforms in Mexico has led to heightened investor uncertainty and increased short-term market volatility," it added.