It will be difficult for the next federal administration to keep the government’s net debt stable, given greater fiscal pressures and public spending needs, Citibanamex warned.
“We consider it difficult to stabilize the debt next year. “The legacy of the current administration on public finances will be a moderate increase in debt, modestly higher tax revenues, but stagnant revenues, increasing spending pressures and higher deficits with fewer buffers,” the bank said in a report.
Last week, the Ministry of Finance and Public Credit (SHCP) announced that by 2025, the federal government’s net debt is expected to reach 18.15 trillion pesos, equivalent to 50.2 percent of the Gross Domestic Product (GDP). , from the estimated 17.04 billion pesos at the end of 2024.
However, if only the debt estimate for 2024 is met, the six-year term of President Andrés Manuel López Obrador would close with the highest debt of the 21st century, according to figures from the SHCP.
To keep debt stable as a percentage of GDP, the agency reported that it would be necessary to cut spending by at least 2.9 percentage points, where the main items affected would be capital spending, physical and financial investment.
According to the economic studies area of Citibanamex, the reduction in spending proposed by the SHCP would be slightly greater than in 2017, of 2.8 percentage points, which was registered in a context of expansion of public debt and risk of a cut to the credit rating of sovereign bonds.
“We consider it difficult to implement a reduction in spending in 2025 beyond that related to the lower financial cost, the expenses related to the organization of the elections, and less support for Pemex,” added the Citibanamex specialists.
For the financial institution, although there were gains in collection efficiency, the great absence of this six-year term was a tax reform, a commitment raised at the beginning of the administration.
“In our opinion, the opportunity was missed to take advantage of the political capital that was available at the beginning of the six-year term to obtain consensus and strengthen public finances; There is a problem due to the lack of coordination between fiscal and monetary policy,” concluded the economic studies area of Citibanamex.