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El alcalde del VI Ayuntamiento de Loreto, Jorge Avilés Pérez, reconoció que debido a la poca inactividad económica, las instituciones bancarias Bancomer y Banamex cerraron sus sucursales en este pueblo mágico de Loreto, Baja California Sur.

“Durante los últimos días, personal contratado por estas instituciones bancarias ha estado desmantelando sus oficinas, llevándose todo el mobiliario, luminosos y hasta los dos cajeros que se encontraban dando servicio”, expresó el edil loretano.

“¡Son chingaderas que no haya ningún pinche banco en este pueblo!”, expresó molesto un usuario de Banamex que iba de paso e hizo una parada para retirar dinero en efectivo y quien decidió regresar a la ciudad de San Quintín, Baja California, luego de participar en la cabalgata del poblado de San Javier.

Cabe destacar que hasta el momento BBVA Bancomer no ha emitido ningún comunicado oficial en torno al cierre de esta segunda sucursal que tenían ubicada en Loreto, lo cual está provocando la molestia de muchos de sus clientes, quienes lleguen a tratar de recibir algún servicio y se lleven la sorpresa de encontrar las oficinas vacías.

La Crónica de Hoy | Loreto, BCS, se queda sin bancos

The mayor of Loreto, Jorge Avilés Pérez, admitted that due to the lack of economic activity, Bancomer and Banamex are closing their branches in the Magic Town of Loreto, Baja California Sur.

"Over the last few days, personnel contracted by these banking institutions have been dismantling their offices, taking all the furniture, lights and even the ATM's which were providing service," said the mayor.

"This is pure bullshit that there will not be any fucking bank in this town!," said a bothered Banamex customer who was travelling through and stopped to withdraw some cash, and who then decided to return to San Quintín, Baja California, after participating in a parade in the town of San Javier.

It should be pointed out that as of the moment, BBVA Bancomer has not issued an official report about the closing of its second branch in Loreto, which is causing some annoyance with many of its customers, who come to try to come to the bank for business and are surprised to find the offices closed.

You'd think that with Banamex already being closed, Bancomer's business would pick up enough to warrant staying open. Guess not.

Looks like Loreto's closest bank will be in Cd. Constitucion? That's got to be tough for business owners.

not fun....

Banamex and the Bancomer branch on the highway closed, but the Bancomer downtown branch is still operating.

Speaking of business ...

By JUAN MONTES
Updated Feb. 21, 2014 12:02 p.m. ET
MEXICO CITY— Paul Noriega's travails reflect what went wrong with Mexico's economy last year. His company, a cleaning-products supplier whose main clients are public hospitals, was stalled for months, sales fell by half and some workers were laid off.

The reason: government spending didn't flow for much of the year.

"We hadn't lived anything like this in the last 12 years," says Mr. Noriega, a young Mexican businessman who runs the firm with his father. "Orders from the IMSS [the social security system] suddenly plummeted. We had to tighten our belts and use our savings to survive."

Massive delays in government spending are one of the reasons behind Mexico's poor performance last year. Latin America's second-largest economy expanded just 1.1% in 2013, the statistics agency said Friday, which translates into the creation of around 200,000 new jobs in a country of 112 million people.

The growth data poured cold water on the optimism with which President Enrique Peña Nieto began his administration in December 2012. Instead of the 3.5% growth initially expected in his first year in office, it was the slowest growth since the 2009 recession.

Mr. Peña Nieto has attributed the economic downturn mainly to the change of administration and weak export demand north of its border. "The U.S. recovery wasn't as strong as expected, and that affected the dynamism of our own exports. And then we have the turnover in government: as happens every six years, the rhythm of spending changes," Mr. Peña Nieto said in an interview this week.

Other factors also determined Mexico's sluggish performance, economists say.

The construction sector fell into recession due in part to the unsustainable pile of debt at the country's biggest housing construction companies. The lack of natural gas supplies in some regions also dented activity. And many investors postponed decisions until seeing the final outcome of Mr. Peña Nieto's economic reforms in energy and telecommunications, which passed Congress last year.

"Definitely, it was the perfect storm," said Jonathan Heath, an independent economist who has worked for Mexico's statistics agency.

But some analysts say the government's initial optimism and badly handled spending also had a crucial impact.

"First, the government asked Congress for a balanced budget in 2013...when the global economy was still fragile. That was a mistake because it involved a contraction of spending compared to the previous year," said Gerardo Esquivel, an economist at the Colegio de México university.

"On the other hand, it is now clear that Finance Minister Luis Videgaray neglected the daily management [of the economy] because he was too involved in the political negotiations to get the economic reforms passed in Congress," Mr. Esquivel added. He said government spending fell 10% in the first quarter of last year, compared to the 3% and 6% increases respectively seen at the start of the two previous administrations.

Last year was a busy one for Mr. Videgaray and his team. Some of the key officials appointed at the finance ministry, including the deputy finance minister and the deputy minister of spending, lacked any experience in the federal-government machinery. Also, working out complex banking and tax overhauls took up much of their time, according to several senior government officials who asked not to be named.

Several ministries with significant budgets, such as the transport ministry, or SCT, took a long time to start up. Regional delegates of the SCT, who are in charge of speeding up infrastructure projects and tenders, weren't named until April, according to the government officials.

By May, the economic slowdown was already evident. The government slashed its GDP forecast three times last year: first to 3.1%, then to 1.8, and finally to 1.3%.

Spending delays were starting to have notable side effects: suppliers weren't paid on time, and new tenders were postponed. For Mr. Noriega, the businessman, the data had a bitter effect. "By midyear, we had the warehouses full of stock waiting to be sold," he says.

The Finance Ministry started work over the summer on a request for Congress to approve a small budget deficit for 2013 and a wider one for next year to support economic growth through additional public spending—financed with more debt and new taxes.

From September, government spending accelerated, supported in part by the reconstruction efforts after several major storms hit the country, and by the end of the year the budget had been fully exercised.

But the harm to the economy was already done. The October-December period didn't see a recovery, growing just 0.2% from the previous quarter. For 2014, Mr. Peña Nieto expects the economy to expand an above-consensus 3.9%, although many analysts are seeing a weak first quarter.

"The recovery will take some time because the impact of the new spending won't be immediate," said Mr. Heath, the economist. "The new taxes have also created uncertainty and are already hurting household consumption and business confidence."

Mr. Noriega doesn't see light at the end of the tunnel yet. "As of today, we haven't seen any improvement in activity," he says.

Write to Juan Montes at juan.montes@wsj.com

"Massive delays in government spending are one of the reasons behind Mexico's poor performance last year."

well, that is telling. Maybe next year they can cheer about Chinese investment.

Another great example of relying on government to take care of things. When the citizens are totally reliant on the government for daily activities, they become subjects and not citizens. Sorry to get political but it is what it is.

no need to apologize for calling a spade a spade.

Originally Posted by ncampion

Another great example of relying on government to take care of things. When the citizens are totally reliant on the government for daily activities, they become subjects and not citizens. Sorry to get political but it is what it is.

Not quite as black and white as that.. .. . .

Our company has been hurt by the lack of government spending, but in a different way. We export manufactured goods from Mexico and we're still waiting to get our IVA back from over a year ago. A years worth of IVA that we can't get and pump back into the economy. Our accountants don't know why and we've had to hire a lawyer, so I guess it's good for him. Depressing situation.

So in a twisted way, reading this article made me feel better......

Originally Posted by bwall

Not quite as black and white as that.. .. . .

Our company has been hurt by the lack of government spending, but in a different way. We export manufactured goods from Mexico and we're still waiting to get our IVA back from over a year ago. A years worth of IVA that we can't get and pump back into the economy. Our accountants don't know why and we've had to hire a lawyer, so I guess it's good for him. Depressing situation.

So in a twisted way, reading this article made me feel better......

The IVA system is that bad huh? How is a system that permits a one year delay in distributing funds able to attract new investors?

That's what we say. .... It's never been that fast, but since the change in gov't, it's gotten a lot worse. I spoke with a Canadian who can get his VAT return back (from Canada) usually within a couple of weeks, sometimes as fast as 48 hours (!!!). Mexico is competing with that, not just with the neighbor to the north....

For me, the worst part is the uncertainty. If they said from the beginning, 'wait X months and then you'll get it.' then I could handle that. But that's not what happens.. . ..

Originally Posted by bwall

That's what we say. .... It's never been that fast, but since the change in gov't, it's gotten a lot worse. I spoke with a Canadian who can get his VAT return back (from Canada) usually within a couple of weeks, sometimes as fast as 48 hours (!!!). Mexico is competing with that, not just with the neighbor to the north....

For me, the worst part is the uncertainty. If they said from the beginning, 'wait X months and then you'll get it.' then I could handle that. But that's not what happens.. . ..

well, if the banks closing in Loreto gave you some shadenfreude, two of three banks in San Felipe are now closed. See related thread.

From this weeks Gringo Gazette:

Gringos' homes reassessed in Loreto:

Seems the current mayor is no choir boy, either. Many property values, all in Gringo neighborhoods, have sky rocketed as much as 4,000% in one year. And no, they were not under assessed before. This is simply a money grab from people judged to have the ability to pay and to not know where and how to fight it. Many of these properties now can’t be sold, as this has caused the capital gains taxes on the newly assessed property values to increase by tens of thousands of dollars. So, of course, the real estate market has tanked again. Poor Loreto, we just can’t seem to catch a break.

Originally Posted by Woooosh

well, if the banks closing in Loreto gave you some shadenfreude, two of three banks in San Felipe are now closed. See related thread.

No schadenfreude about the bank closings--that's just tragic. A prerequisite for a healthy economy is healthy banks. We all got an object lesson in Sept. 2008 when Lehman Bros collapsed .. . . I was referring the article posted by Wesson and slow gov't payments.

And the property reassessment issue seems like a real nightmare designed to scare away foreign investment.

Banks make money by making loans. Most small town Mexican citizens don't get loans from banks so all the bank ends up doing is taking small deposits and despensing cash. There's no profit in that. Can't really blame them, of course making loans to Mexicans has got to be a tough business as (in my personal experience) they don't really intend to ever pay back the loan. I'm sure the default rate is sky high. When a Mexican asks me for a loan, I usually just give them some money and consider it a gift.

Originally Posted by ncampion

Banks make money by making loans. Most small town Mexican citizens don't get loans from banks so all the bank ends up doing is taking small deposits and despensing cash. There's no profit in that.

I always wondered why there aren't any small banks in Mexico. Like in small town USA you can find the 1st Bank of Main St., or whatever, with about two or three buildings, 10-15 employees, and that's it. But there isn't anything similar in Mexico.

Someone told me once, or else I read, that it was incredibly difficult to open a bank (impossible?) without the gov't approval. Does anyone here know about the regulations?

I know of some people who opened a small, community bank here recently. There is a lot of bureaucracy and the capital/assets required to do so is no small sum. We will be seeing some new banks here in Mexico in the coming year; banks from the orient and Europe are said to have reached agreements with the federal government to begin operating here soon...

Originally Posted by BajaGringo

We will be seeing some new banks here in Mexico in the coming year; banks from the orient and Europe are said to have reached agreements with the federal government to begin operating here soon...

Honestly is that a good thing?
I know banks fron Spain have been here for centuries but Asian, is that looking for an eventual situation of Loss of Control?

Originally Posted by CDN_JOHNNY

Honestly is that a good thing?
I know banks fron Spain have been here for centuries but Asian, is that looking for an eventual situation of Loss of Control?

it does present some interesting scenarios, huh?

Originally Posted by Woooosh

From this weeks Gringo Gazette:

Gringos' homes reassessed in Loreto:

Seems the current mayor is no choir boy, either. Many property values, all in Gringo neighborhoods, have sky rocketed as much as 4,000% in one year. And no, they were not under assessed before. This is simply a money grab from people judged to have the ability to pay and to not know where and how to fight it. Many of these properties now can’t be sold, as this has caused the capital gains taxes on the newly assessed property values to increase by tens of thousands of dollars. So, of course, the real estate market has tanked again. Poor Loreto, we just can’t seem to catch a break.

I can't read the article without paying for the GG but does that info make sense?
The capital gains tax you pay is based on the difference between what you paid for the property and what you sell it for- not the municipality's assessed value of the property. Correct?

When we've sold property in the past and after our recent casa construction we've "manifested" the improvements by requesting a re-assessment by catastro so we can get credit for the money we've put in to it at sale time. This did raise the assessed value but lowered the capital gains tax we paid when we sold our former property. Our property taxes have decreased after our recent casa construction because bare land is assessed at a higher rate in BCS.