Sheinbaum's Judicial Reform Stirs Mexican Markets Ahead of Congressional Session

Mexican President-elect Claudia Sheinbaum plans to propose significant constitutional reforms, including a controversial judicial overhaul, before the next congressional session. The reform seeks to replace the appointed Supreme Court with popularly elected judges. Market reactions have been unfavorable, causing the peso to weaken by nearly 2% against the U.S. dollar.

Reuters | Updated: 11-06-2024 05:50 IST | Created: 11-06-2024 05:50 IST
Sheinbaum's Judicial Reform Stirs Mexican Markets Ahead of Congressional Session
Claudia Sheinbaum

Mexican President-elect Claudia Sheinbaum said on Monday she would put up for discussion proposed constitutional reforms, including a judicial overhaul that has spooked markets, before the next congressional session kicks off. The judicial reform would replace an appointed Supreme Court with popularly elected judges, as well as for some lower courts, which critics allege would fundamentally alter the balance of power in Mexico.

Sheinbaum, speaking in a press conference following a meeting with outgoing President Andres Manuel Lopez Obrador, said the reform would be "among the first" that could be passed, along with some boosted social benefits. She added she did not believe the proposed reforms would impact the peso, which tumbled following her election win earlier this month.

As Sheinbaum was speaking, however, the peso weakened by nearly 2% against the U.S. dollar in international trading. Some of the measures are part of a slew of constitutional reforms Lopez Obrador proposed in February that would also eliminate key regulatory agencies.

At the time they did not cause market jitters, but investors sounded the alarm as the ruling coalition honed in on a congressional super-majority needed to pass constitutional reforms in the June 2 election. The coalition led by MORENA secured a two-thirds super-majority in the lower house but fell just short in the Senate, although analysts believe those extra votes can likely be secured through negotiation.

While the newly elected Congress will take office at the beginning of September, Sheinbaum will not be inaugurated until a month later, which could give Lopez Obrador and lawmakers a window to try to enact the reforms. "In the case of the judicial reform, (discussion) should be through the bar association, professors of law, the ministers and magistrates themselves," Sheinbaum said.

She added she would name her cabinet next week, and that she would receive a team sent by U.S. President Joe Biden on Tuesday. Lopez Obrador had said earlier in the day he would not pressure Sheinbaum to rush the package of constitutional reforms through Congress.

Mexico's peso is now down 8% since the elections Sheinbaum and her party won in a landslide - its biggest plunge since the COVID-19 pandemic - while the country's main stock index has fallen nearly 4%.

(This story has not been edited by Devdiscourse staff and is auto-generated from a syndicated feed.)

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