Mexico postpones financial reform presentation in political row

By David Alire Garcia and Dave Graham

MEXICO CITY (Reuters) - Mexican President Enrique Pena Nieto has suspended plans to present a new banking sector reform due to disagreements among the main political parties, raising doubts over his wider reform agenda eagerly watched by investors.

Pena Nieto had been negotiating the banking overhaul aimed at boosting credit under a pact he forged with leaders of the opposition to work together on major economic reforms, but cracks in the agreement have appeared due to a political dispute over election funding.

The impasse over finances comes at the same time as a sweeping telecoms sector reform, aimed at taming market heavyweights like billionaire Carlos Slim's telecoms giant America Movil, is in the final stretch toward full approval.

If the spat deepens, it also could interfere with the government's landmark fiscal and energy reforms that the government hopes will boost annual economic growth to 6 percent.

"President Pena Nieto has taken the decision to temporarily suspend public activities related to the Pact for Mexico, to open a space for frank dialogue that allows disagreements to be overcome and strengthen the pact," Pena Nieto's office said in a statement.

The opposition conservative National Action Party, known as PAN, said its leader Gustavo Madero would not attend the presentation after accusing Pena Nieto's Institutional Revolutionary Party, or PRI, of using funds from the Social Development Ministry to help its chances in local elections in the state of Veracruz.

The main leftist grouping, the Party of the Democratic Revolution, or PRD, later supported the PAN in the row, prompting the president's office to suspend Tuesday's presentation in an attempt to resolve their differences.

Social Development Minister Rosario Robles has come under fire in the row, and Pena Nieto has backed her to date.

"The response of President Enrique Pena Nieto ... constitutes carte blanche for election miscreants. These hurt and contradict the contents and aim of the Pact for Mexico," PRD Chairman Jesus Zambrano said in a statement late on Monday.

Since Pena Nieto unveiled the plan days after taking office in December, the Pact for Mexico has constituted the foundation of his government's reform efforts, including a shake-up of the education system and in addition to the telecommunications and energy industries.

In a radio interview Tuesday morning, Mexican Finance Minister Luis Videgaray said the financial reform bill should be introduced "in the next few days."

(Additional reporting by Miguel Gutierrez and Ana Isabel Martinez; Editing by Simon Gardner and Theodore d'Afflisio)