Desaforada / AMLO’s legacy – El Sol de México

Yes tomorrow Claudia Sheinbaum or Xóchitl Gálvez If they win the presidency, one of the main problems they will have to face in terms of public finances is the debt that the government of Andrés Manuel López Obrador (AMLO) will inherit, which will be the highest ever recorded in this 21st century. Do you remember when AMLO criticized Enrique Peña Nieto (EPN) for putting the country in debt? “A talker falls faster than a lame person,” they would say.

The country’s total debt will reach 17.04 billion pesos at the end of 2024, the last year of the Fourth Transformation government. Just so you don’t forget, at the end of 2018, when AMLO took the presidential chair, the debt was 10.55 billion pesos. If it is compared to GDP, it will go from 43.6% to 50.2%.

It is worth saying that there are economies like the United States, whose debt exceeds 100% of its GDP, or Japan, which is more than 200%, but let’s focus on Mexico’s capabilities.

What really stands out is that the increase in debt in this six-year term did not occur during the Covid-19 health crisis in 2020 as many countries did to cope with the economic strike, but rather debt will skyrocket in this last year. of government.

Data from the Ministry of Finance and Public Credit show that in 2020, the Historical Balance of the Financial Requirements of the Public Sector, the broadest measure of the country’s debt, rose by 1.21 trillion pesos, compared to 2019; and by 2024 it will have an increase of 2.18 billion pesos, compared to 2023.

As you know, when you go into debt, interest must always be paid and the same thing happens in the case of the government. In 2018, a total of 615,040 million pesos were paid for the financial cost of the debt and by 2024 up to 1.22 trillion pesos will be allocated.

In this scenario, consider that there are other expenses that the government must cover, such as the payment of pensions and retirements, and do not stop investing in education, health, and of course, in infrastructure to generate jobs and promote consumption.

ButWhat if your income is not enough? What would you do? Well, the government can’t stop paying interest or it would get in trouble with the rating agencies and basically everyone.

By 2025 and in order to stabilize the debt, the Treasury foresees on a good hunch in the General Precriteria of Economic Policy that the next government will seek to reduce public spending by 2.9 points of GDP. This adjustment would come precisely from reducing spending on investment and in some bureaucratic items such as the 1000 branch of Personal Services, among others.

In a report, Citibanamex indicates that the most advisable thing is to carry out a tax reform to increase income, but so far none of the presidential candidates has put the issue on the table.

I wonder: Is that called inheritance of healthy finances? Will Sheinbaum or Gálvez want to reduce investment spending in their first year in office? Or will they stop giving resources to Pemex?


X: @ElizaAlbarran

TikTok: @elizalbarran11

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