Introduction
Mexico’s President Claudia Sheinbaum recently addressed the nation about the 2026 budget, emphasizing the need to tackle the “corrupt debt” accumulated by her predecessors, Felipe Calderón and Enrique Peña Nieto. As she presents the first entirely responsible budget, Sheinbaum faces a common challenge for incoming presidents worldwide: grappling with the harsh realities of government spending and debt.
Government Spending and Debt: A Global Issue
By nature, governments tend to overspend, juggling genuine and imagined commitments, fundamental societal needs, and governmental whims. These can range from submarines to tinacos (water tanks) and even voting tablets. In recent decades, nations face a dual challenge of dwindling funds and burgeoning debts. This predicament is not exclusive to Mexico, as it was exacerbated by the 2008 global financial crisis.
The Rising Burden of Debt and Pension Challenges
Governments are expected to provide an extensive array of rights without the financial backing to enforce them. This challenge is compounded by the daunting task of pension reform, as these systems cannot sustain themselves due to governments’ and beneficiaries’ reluctance to acknowledge that people live longer today than in the past.
Mexico’s Debt Accumulation: A Historical Overview
Sheinbaum’s government must address the debt accumulated by Calderón, Peña Nieto, and their predecessors, including Andrés Manuel López Obrador. To understand the gravity of the situation, let’s trace back to mid-last century.
Debt Condonation and Subsequent Accumulation
In 1946, following Mexico’s participation in World War II on the victorious side, the nation had its debt condonated. Over the next 72 years and through twelve presidents, this debt grew to 10.5 trillion pesos.
López Obrador’s Contribution to the Debt
In just five years and ten months, López Obrador added 17.7 trillion pesos to the debt, accounting for approximately 70% of the total accumulated by his predecessors.
Sheinbaum’s Projected Debt Accumulation
By her second year, Sheinbaum is expected to reach 20 trillion pesos, doubling the time it took previous administrations (72 years) to accumulate such debt.
The Unaddressed Issue of Government Debt
The Mexican government has failed to adequately address its mounting debt, and more alarmingly, the budgets of successive governments have not effectively stimulated economic growth. Between 2019 and 2026, Mexico’s governments are projected to spend 67 trillion pesos without achieving a minimum required economic growth rate of 4%.
Key Questions and Answers
- What is the main issue Sheinbaum faces with the 2026 budget? Sheinbaum must confront the challenge of addressing a massive, historically accumulated debt left by her predecessors.
- How has Mexico’s debt grown over time? The debt has increased significantly since 1946, with substantial growth occurring during the administrations of Calderón, Peña Nieto, and López Obrador.
- What are the broader implications of Mexico’s debt situation? The unaddressed debt issue hinders economic growth, and governments’ budgets have failed to foster sustainable development.
