Introduction
As Mexico moves into 2026, questions arise about the government’s strategy to tackle fiscal challenges. How will they address the inherited budget deficit of nearly 6%? How can public investment be increased, crucial for economic growth?
The Importance of Public Investment
Public investment is vital for enhancing infrastructure, such as roads, ports, hospitals, and schools. It’s essential for funding projects that promote social well-being and sustainability. In Mexico, public investment is crucial for driving economic growth, fostering private investment, and promoting regional development.
However, its relative weight has decreased in recent years, estimated to be 2.5% of GDP by the end of this year. This limited impact on economic growth contrasts with private investment, which contributes 16.4% of GDP.
During López Obrador’s tenure, public investment averaged 2.7% of GDP, the lowest level in the past 30 years. From 2019 to 2024, public investment focused on priority projects like the Tren Maya, Refinería Olmeca in Dos Bocas, Corredor Interoceánico del Istmo de Tehuantepec, Aeropuerto Internacional Felipe Ángeles, and Tren Interurbano México-Toluca.
These projects have incurred overruns, failed to generate income, and still require subsidies. Meanwhile, private investment was the primary driver, reaching 90% of total investment in Mexico.
Fiscal Policy Debate
The fiscal policy debate revolves around whether a tax reform is necessary amidst the severe fiscal adjustment required for public finances. Some argue that a tax reform is inevitable to increase fiscal revenue, while government representatives insist on tackling corruption, reducing tax evasion and avoidance, and enhancing revenue efficiency before considering a tax reform.
Government’s Stance
President Claudia Sheinbaum has ruled out a tax reform, maintaining the fiscal approach set by her predecessor, Andrés Manuel López Obrador. She believes this strategy has successfully increased revenue without resorting to a tax reform.
Sheinbaum highlighted capturing 30,000 million pesos through an import tax on packaging and online sales platforms. Additionally, customs have collected 180,000 million pesos more between last year and this year. The federal government’s income has multiplied from 2.6 billion pesos in August 2019 to 4.1 billion pesos in August 2025.
Paradoxical Situation
Despite these achievements, Morena’s coordinator in the Chamber of Deputies, Ricardo Monreal, acknowledged that the budget is insufficient for the country’s needs. Although fiscal revenue is increasing, the margin between income and expenditure remains narrow, with expenditures continuing to grow.
Key Questions and Answers
- Question: Will there be tax hikes in Mexico?
- Question: How will the government increase fiscal revenue?
- Question: What has been the government’s fiscal approach?
- Question: How has public investment performed under López Obrador’s administration?
- Question: What is the current state of Mexico’s public finances?
Answer: No, President Claudia Sheinbaum has ruled out any increase in the Value-Added Tax (VAT) or Income Tax (ISR).
Answer: The government plans to strengthen fiscal oversight and combat tax fraud, particularly targeting “factureras” – companies selling fake receipts to defraud the Servicio de Administración Tributaria (SAT).
Answer: The government has maintained the fiscal approach set by former President Andrés Manuel López Obrador, focusing on enhancing fiscal efficiency and combating tax evasion.
Answer: Public investment averaged 2.7% of GDP, the lowest in three decades. Priority projects have faced overruns and failed to generate income, requiring ongoing subsidies.
Answer: Although fiscal revenue is increasing, the margin between income and expenditure remains narrow, with expenditures continuing to grow.
