Background on the Mexican Government and its Fiscal Policies
The Mexican federal government will not achieve the expected fiscal consolidation by 2025, as a revision in historical Gross Domestic Product (GDP) series has led to an adjusted deficit projection, according to the Secretaría de Hacienda y Crédito Público (SHCP).
Historical Context and Previous Projections
In 2024, the Requerimientos Financieros del Sector Público (RFSP) – a broad measure of public debt – reached a historical high of 5.7% of GDP, prompting the government to implement various spending cuts to reduce this indicator.
Initially, the Secretaría de Hacienda, under Édgar Amador Zamora, projected that the deficit would be reduced to 3.9% of GDP. However, the Criterios Generales de Política Económica (CGPE) for 2026 modified this projection upwards to a range between 4.3% and 4.4% of GDP.
Impact of PIB Series Update
The Mexican statistical institute, Instituto Nacional de Estadística y Geografía (INEGI), recently updated the historical series of GDP for 2023 and 2024. This adjustment has resulted in the expected deficit for the end of the previous year now being 4.5% of GDP.
Challenges and Future Outlook
The primary challenge for public finances last year was to achieve fiscal consolidation amidst spending cuts and slower-growing public revenue compared to the resources expended.
This challenge persists for the current year, though with fewer cuts. The RFSP is projected to be at 4.1% in 2026.
“This adjustment will not only maintain a stable trajectory for public debt but also provide certainty to the population, markets, and the international community regarding Mexico’s commitment to fiscal sustainability,” stated Hacienda in the CGPE 2026.
Public Debt Adjustment
Regarding the Saldo Histórico de los Requerimientos Financieros del Sector Público (SHRFP), the broadest measure of public debt, it will also be slightly affected by the updated PIB series.
Previously, the administration of Claudia Sheinbaum anticipated that the broad debt would be at a historical level of 52.3% of GDP by the end of the previous year; however, it is now expected to be 52.4%.
“The SHRFP will be at 52.3% of GDP, confirming that despite international volatility, public debt maintains a stable and sustainable trajectory, backed by solid macroeconomic fundamentals and prudent fiscal management,” the SHCP noted in the CGPE 2026.
For this year, the federal government expects the debt to remain at 52.3% of GDP, considering it a “stable and sustainable path in the medium term.”
Key Questions and Answers
- What is the revised deficit projection for 2025? The deficit is now expected to reach 4.5% of GDP in 2025, up from the previously anticipated 3.9%.
- Why was there a need to adjust the fiscal consolidation target? The adjustment stems from a revision in historical GDP series, which led to a higher-than-projected deficit.
- What is the current public debt as a percentage of GDP? The broadest measure of public debt is projected to be 52.4% of GDP.
- What are the government’s expectations for public debt in the medium term? The federal government anticipates maintaining a stable and sustainable public debt level at 52.3% of GDP in the medium term.
