Mexico revives political pact, eyes financial reform

President Enrique Pena Nieto and Mexican opposition leaders presented a vast financial reform plan Wednesday after the two sides resolved a feud that had threatened to break an unprecedented political alliance.

Appearing with the three parties that form the Pact for Mexico, Pena Nieto said the latest reform drive of his young presidency aims to encourage banks to give more loans at cheaper interest rates.

The legislation, which will be sent to Congress for debate, seeks to boost the development bank and increase competition between financial institutions to reduce the costs of credit and services.

"There is no intention at all to reduce interest rates by decree," Pena Nieto said.

Finance Minister Luis Videgaray said credit in Mexico is equivalent to 26 percent of gross domestic product, compared to an average of 50 percent in the rest of Latin America.

The reform was supposed to have been presented on April 23, but it was delayed after the opposition accused the ruling Institutional Revolutionary Party (PRI) of using social programs to secure votes in upcoming regional elections in July.

But the conservative National Action Party (PAN) and the leftist Democratic Revolution Party (PRD) agreed to revive the Pact for Mexico after the government agreed to take measures to prevent the abuse of social programs for electoral gain.

Since Pena Nieto took office in December, the pact has led to the approval to a major overhaul of the education system and legislation to open competition in the highly concentrated telecommunications industry.

The president hopes to reform the fiscal system and the energy sector this year.