The 2026 fiscal package that will present the Treasury at the latest on September 8 will prioritize a short -term approach, delaying structural and lasting solutions, according to the Banamex Financial Group.
The government’s proposal will include increases in income from efficiencies and other non -tax measures, together with additional spending cuts, particularly in public investment, to meet the objective of maintaining constant debt as a percentage of GDP.
However, a medium -term structural solution will be postponed that includes a significant strengthening of tax revenues that bring them closer to similar nations collection levels and involves an expense that addresses lags in infrastructure, education and health generated by cuts and that improves efficiency in the allocation of spending of recent years, according to an analysis published on Wednesday.
The Banamex document pointed out that in the absence of comprehensive tax reform and difficulties in cutting the expense, for social spending commitments and demographic pressures, the Treasury must establish a credible tax consolidation route by 2026 and the following years, in a context of global uncertainty and modest economic growth.
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He recalled that in pre-criteria 2026 the government estimated the total expenditure for that year in 24.4% of GDP, which would imply a cut of 1.3 percentage points compared to the percentage planned by 2025, in order to keep the public debt constant in 52.3% of GDP.
On the other hand, the Government anticipated for 2026 revenues of the order of 21.7% with respect to GDP, but changes in the fiscal miscellaneous regarding the collection of customs, tariffs, as well as the possibility of increases to the IEPS of alcoholic and sugary drinks and cigarettes are anticipated.
Therefore, the administration could argue that these measures would increase the collection by around 0.5% of GDP, and thus bring budget revenues to 22.2% of GDP.
To the extent that the Treasury estimates the income above what is projected in pre-criteria will have space to propose a lower expenditure cut, and continue with the goal of maintaining the debt without changes.
The Financial Group estimated that the Government will propose a decrease of 0.8 percentage points in spending, so that it would be 24.9% of GDP.
He considered that although a cut of that size would be affordable, it would be achieved at the expense of a lower public investment, since most of the rest of the expense is compromised, which will have negative repercussions on the economic growth of short and medium term.
With these forecasts and a non -budget deficit of 0.5% of the
GDP, as traditionally proposes the Treasury in economic packages, the Government would project a broad public deficit of 3.2% of GDP, while Banamex calculated it by 3.5%.
Provides that government reduce growth estimate
The lender explained that the official growth forecast for this year presented in pre-criteria, which goes from a range of between 1.5% and 2.3%, should be reviewed down considering the weakness of the economic growth observed in the first half.
In order for the economy to grow 1.9% in 2025, a growth of at least 2.5% should be observed during the second half of the year, which is complicated when considering the average growth of 0.4% during the first half of the year.
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For that reason, Banamex anticipated that the government reviews its calculation to a possible range of between 0.8% and 1.5%, which will continue to be optimistic compared to the consensus of analysts, of 0.4%, and the 0.6% expected by Banxico.
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