Background on Claudia Sheinbaum’s Administration
Claudia Sheinbaum, the current Head of Government in Mexico City, has been implementing measures to achieve fiscal consolidation and reduce the budget deficit to 3.9% of the Gross Domestic Product (GDP). The Secretaría de Hacienda y Crédito Público (SHCP) has been closely monitoring the government’s spending to ensure adherence to these fiscal goals.
Spending Overview
According to the Informe de Finanzas Públicas y la Deuda Pública report for May, the government spent a total of 3,722,604 million pesos in the first five months of 2023. This represents a 5.3% decrease compared to the same period in the previous year.
- Total Spending: 3,722,604 million pesos
- Decrease compared to previous year: 5.3%
The report also highlights that the government spent 224,387 million pesos less than what was originally planned. However, the spending was 94.3% efficient concerning the programmed amount, ensuring the provision of social programs, infrastructure, and public services.
Programmable vs. Non-Programmable Spending
There was a notable 9.6% decrease in programmable spending, which is responsible for providing services to the population. A total of 2.6 trillion pesos were spent, which is 205,067 million pesos less than what was planned.
- Programmable Spending: 2.6 trillion pesos
- Decrease compared to plan: 205,067 million pesos
On the other hand, non-programmable spending (excluding financial costs) grew by 2.4%. This category received 648,718 million pesos, which is 1,682 million pesos more than what was planned.
- Non-Programmable Spending: 648,718 million pesos
- Increase compared to plan: 1,682 million pesos
Revenues and Petroleum Incomes
Despite economic uncertainty, tax revenues have shown significant growth. In the first five months of 2023, tax incomes amounted to 2,411,895 million pesos, marking an annual increase of 8.9% – the highest in nearly a decade for a similar period.
- Tax Incomes: 2,411,895 million pesos
- Annual Increase: 8.9%
The growth in tax revenues was primarily driven by the collection of Value-Added Tax (VAT) and the Income Tax (ISR). VAT incomes reached 653,541 million pesos, a 12.5% annual increase, while ISR incomes totaled 1.7 trillion pesos, an 8.2% increase.
Petroleum Incomes
In contrast, petroleum incomes have fallen short of projections. Between January and May 2023, these incomes amounted to 375,217 million pesos, a 23.8% annual decrease. Additionally, they were 175,561 million pesos below the estimated amount for the period.
- Petroleum Incomes: 375,217 million pesos
- Annual Decrease: 23.8%
The shortfall can be attributed to the failure to meet petroleum production targets during this period. Expected oil production with condensate reached 1.69 million barrels per day, falling short of the targeted 1.87 million barrels per day. Similarly, the extraction platform reached 689 million barrels per day, missing the expected 900 million barrels per day.
Key Questions and Answers
- What is the main focus of the Mexican government’s spending measures? The government aims to achieve fiscal consolidation and reduce the budget deficit to 3.9% of the GDP under Claudia Sheinbaum’s administration.
- How has public spending performed in the first five months of 2023? Public spending decreased by 5.3% annually, with a 94.3% efficiency rate concerning the programmed amount, ensuring social programs, infrastructure, and public services.
- What is the growth rate of tax revenues in the first five months of 2023? Tax revenues increased by 8.9% annually, driven mainly by VAT and ISR collections.
- How have petroleum incomes performed compared to projections? Petroleum incomes have fallen short of expectations, decreasing by 23.8% annually and being 175,561 million pesos below the estimated amount for the period.
