The Mexican Institute for Competitiveness (IMCO) warned that the fiscal discipline goals in the 2025 Economic Package are not very credible, and if they are not met, the credit rating of the sovereign debt could be at risk, which would affect the country’s competitiveness and the public spending, such as that allocated to social programs.
Although the Treasury seeks to reduce the public sector deficit from 5.9% of GDP in 2024 to 3.9% in 2025 to maintain public debt around 51.4% of GDP, the viability of this adjustment is uncertain, according to the document “Economic Package 2025: doubts about commitments to fiscal discipline.”
The government’s main assumption, economic growth of between 2% and 3% in 2025, does not coincide with the projections of analysts and institutions, indicated the IMCO.
He added that the official estimated range of GDP growth is above the projections of 35 international organizations, public entities, banks, brokerage houses and consulting firms, which predict that GDP will grow between 0.2% and 1.9% next year.
The World Bank estimates GDP growth of 1.5%; the International Monetary Fund, 1.3%; the Organization for Economic Cooperation and Development, 1.2%; Banco de México, 1.2%, and the Citibanamex Survey, 1%.
The IMCO recalled that the economic growth estimated by the Treasury in the General Economic Policy Criteria is usually higher than that observed. Between 2008 and 2023, for example, on 12 occasions the ministry’s projection was higher than the growth actually recorded.
Thus, he warned, if the economy does not grow at the expected rate, the income assumption will hardly be met, particularly tax income (ISR and VAT), which directly depend on economic activity.
In this context, if the fiscal adjustment proposed by the Treasury does not materialize, the debt as a percentage of GDP (one of the key indicators that rating agencies consider to evaluate the capacity of the Mexican government to meet its financial obligations) could exceed 51.4%. projected for 2025.
If the growth of this indicator is not avoided, in a context of deterioration of the investment climate due to regulatory changes that affect legal certainty in the country, there is a risk of downgrades to the sovereign rating that would limit the ability of the Sheinbaum administration to access the capital market under relatively favorable conditions when facing higher financing costs.
Consequently, the government would be forced to redirect additional resources to debt service to the detriment of investment in infrastructure, social programs or other key projects.
In addition to increasing pressure on public finances, a decrease in credit ratings could generate volatility in foreign exchange markets, increase the perception of country risk and reduce foreign direct investment to the detriment of the country’s competitiveness.
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