Background on the Relevant Person or Entity
The Secretaría de Hacienda y Crédito Público (SHCP), Mexico’s Ministry of Finance and Public Credit, is responsible for formulating and executing the country’s fiscal policy. It plays a crucial role in managing public debt and ensuring financial stability for the nation.
Main Topic: Public Debt Reduction in 2025
The historical public debt has decreased by 0.1% in real terms to 49.2% of the national GDP by the end of 2025, according to the Secretaría de Hacienda y Crédito Público (SHCP).
Key Factors Contributing to the Decrease
- Appreciation of the Mexican peso by 6.7% against the US dollar, which reduced the value of external debt in pesos.
- A strong position that has preserved market confidence, maintained favorable financing conditions, and ensured high demand for new federal government emissions.
Composition of Public Debt
As of the end of May 2025, public debt comprised 83% internal debt and 17% external debt.
Moreover, 80% of the portfolio is contracted at fixed rates with long-term maturities, minimizing exposure to interest rate hikes or refinancing pressures.
Significant Reduction in External Debt
Besides the peso appreciation, the SHCP has conducted relevant debt management operations totaling $6,094 million during the current year.
- By July 2, interbond exchanges worth $2,501 million were completed, reducing external debt in dollars with maturities between 2027 and 2031 by 15%.
- The early redemption of two international bonds with maturities in 2026 (one in dollars and another in euros) worth $3,593 million was initiated, covering 85% of the planned amortizations for that year.
Improvement in Sovereign Risk Indicators
The SHCP highlighted that these actions have strengthened the strategy of reducing external exposure, lengthening debt maturity profiles, and maintaining flexibility amid international financial market movements.
- The five-year Credit Default Swap (CDS) spread fell by 21 basis points (bp) to 120 bp as of May’s closing, indicating improved sovereign risk indicators.
Key Questions and Answers
- What is the current public debt as a percentage of GDP? The public debt stands at 49.2% of the national GDP as of the end of 2025.
- What factors contributed to the decrease in public debt? The appreciation of the Mexican peso against the US dollar and strategic debt management operations played crucial roles.
- What is the composition of public debt in 2025? In 2025, 83% of public debt was internal, while 17% was external.
- How has external debt been managed? Through early redemption of bonds and interbond exchanges, external debt has been reduced by 15%.
- What improvements have been observed in sovereign risk indicators? The five-year CDS spread has decreased by 21 basis points, signaling better sovereign risk conditions.
