Mexico Inclusive and Sustainable Economic Growth DPL

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The development objectives of the Inclusive and Sustainable Economic Growth Development Policy Loan in Mexico include policy measures of the authorities that: (a) support vulnerable groups and regions to reap the benefits of economic recovery; and (b) reform key policies and institutions that enable sustainable economic growth. The operation is structured around two pillars. Pillar 1 supports: (i) adopting a new, simplified regime for MSMEs and self-employed individuals; and (ii) policies and institutional reforms to facilitate financial inclusion, particularly for Mexican migrants in the United States. Pillar 2 supports reforms that: (i) improve the management of climate-induce disasters; (ii) ensure sustainable management and conservation of forests; (iii) enhance conservation areas that mutually store carbon and improve resilience; and (iv) enhance the voice and agency of vulnerable rural populations around natural resource management. The operation supports key priorities adopted by the government in the 2022 public budget, including the simplified tax regime and the financial mechanisms to ensure support in case of natural disasters. It also supports key government priorities, such as strengthening the forestry law to bring additional regulatory certainty and regulations to increase financial inclusion. These reforms benefit the poorest rural areas contributing to closing regional income gaps.