Background on Mexico’s Fiscal Situation
Under the administration of President Andrés Manuel López Obrador, Mexico experienced increased borrowing to complete major projects from the previous six-year term, such as the Dos Bocas refinery and the Maya Train. This led to a historical fiscal deficit of 5.7% of the Gross Domestic Product (GDP) in the preceding year.
For 2021, the Mexican government aimed to lower the fiscal deficit to 3.9% of GDP, but adjusted expectations to 4.3% due to a less favorable external environment and adjustments in projections for state-owned enterprises and social security institutions.
November Fiscal Performance
According to Mexico’s Secretaría de Hacienda y Crédito Público (SHCP), the fiscal deficit continued to decrease in November, with the Requerimientos Financieros del Sector Público (RFSP) at 1,168,000 million pesos, a 19% reduction compared to the previous year.
- The budgetary deficit was 91,000 million pesos less than projected.
- The primary budgetary surplus exceeded expectations by 37,000 million pesos.
- RFSP remained within the limits approved by the H. Congress of the Union.
Public Debt Status
The SHCP reported that the public debt, measured broadly, is below the amount reported at the end of the previous year after revising the nominal GDP by the National Institute of Statistics and Geography.
- The historical stock of Requerimientos Financieros del Sector Público (SHRFSP), the broadest measure of debt, is at 51.7% of GDP.
- Most of the government’s debt portfolio is denominated in national currency, at fixed rates, and has long-term maturities.
The public debt stands at 18,261,439 million pesos, a 3.3% increase from the previous year. Of this amount, 76% is local currency debt, and the remainder is foreign loans.
Future Projections
By the end of 2021, SHRFSP is expected to reach a historical level of 52.3% of GDP, reflecting a stable and sustainable debt trajectory supported by strong macroeconomic fundamentals and prudent fiscal management.
Under Claudia Sheinbaum’s administration, the debt is projected to remain at 52.3% of GDP in the medium term, ensuring a stable and sustainable path.
