The Standard & Poor’s (S&P) qualifier on Monday ratified the qualification of Mexico’s sovereign debt in long -term foreign currency in “BBB” and in local currency in “BBB+”, both with stable perspective.
In his most recent decision, S&P explained that he hopes that Mexican public finances will stabilize this year “despite low economic growth”, thanks to a prudent monetary policy and a return to moderate fiscal deficits.
The agency anticipates that the Government of Claudia Sheinbaum will manage with pragmatism the differences with the United States in issues such as trade and immigration to preserve economic stability.
The report warned, however, that a delay in the containment of the fiscal deficit or greater extraordinary support to Petroleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) could lead to a decline in the note in the next two years.
“Similarly, setbacks in links with the United States or the negative economic consequences of controversial internal policies could undermine economic stability and lead to a reduction,” S&P added in their possible scenarios down.
On the contrary, if the country manages to attract more foreign investment with ‘nearshoring’ or investment relocation, strengthen its budgetary flexibility and expand its fiscal base, qualifications could improve.
The qualifier stressed that Mexico has stable institutions, an Independent Central Bank and growing capital markets that strengthen its monetary flexibility.
He also stressed that about 85 % of the sovereign debt is issued in local currency at a fixed rate, which reduces vulnerability to external changes.
According to its estimates, the net debt of the general government will be around 50 % of GDP in 2025 and projected that the net debt of the general government will increase annually by an average of 3.6 % of GDP for the 2025-2028 period.
For its part, the Ministry of Finance celebrated the ratification and stressed that Mexico retains the investment grade with the eight agencies that evaluate its debt.
“With this ratification, Mexico maintains its access in favorable conditions to financial markets. The Ministry of Finance reiterates its commitment to macroeconomic stability, the responsible management of debt and the consolidation of an environment conducive to sustained growth,” he said in a statement.
With EFE information.
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