The Treasury requested from Congress a trillion 906 thousand 69 million pesos of internal debt for 2024. For the external debt, a ceiling of 18 billion dollars is proposed, approximately 316 billion pesos. This represents a truly unique figure and a historic value especially for someone whose government’s “raison d’être” is austerity and, at least in words, not increasing the public debt.
To put in context what the debt requested by the López Obrador administration means: the balance of the Savings Protection Bank Fund (Fobaproa) reached a maximum of 552.3 thousand million pesos, which converted to 2018 prices means one billion 188 thousand, 371 million pesos. If the loan requested for 2024 is converted to 2018 prices—to compare apples to apples—it is equivalent to one trillion 555,880 million pesos.
In fact, the debt demanded by the federal government exceeds Fobaproa. The comparison is continued when compared to the current balance of IPAB (formerly Fobaproa), which is 826 thousand, 127 million pesos (in 2018 prices). The above means that, in fact, the debt in 2024 will exceed the amount of the bank’s historical rescue by 1.3 times.
The size of the public deficit is the highest in thirty years and the budget deficit will be the highest since 1988, there is no doubt that it calls into question fiscal discipline. The primary deficit is also at a 23-year high, with 1.2% of GDP, the closest figure to 2015, with 1.1% of GDP. In general, it can be said that almost all disabilities are expanding to a level not seen in at least 23 years.
Regarding the expanded measure of public debt, the Public Sector Financial Requirements (RFSP), the figure is particularly worrying, as it amounts to 5.4% of GDP. In 2018 it was 2.1%, which means that in six years the weight of debt in terms of GDP has doubled. The balance in 2018 is 10.5 billion pesos, and in 2024 it will reach 16.7 billion pesos; that is, an increase of 59 percent.
If the Historical Balance of the Financial Requirements of the Public Sector (SHRFSP) is reviewed, the weight of debt as a percentage of GDP has a historical weight of at least 23 years, even exceeding the alarming levels of the administration of Enrique Peña Nieto that, In 2016, they reached 48.3% of GDP. The balance left by López Obrador’s administration will be 48.8 percent.
Seen in a broader perspective, the Federation Expenditure Budget for 2024 This suggests a historic cost, as it amounts to 9 trillion pesos, which is 4.2% higher in real terms compared to 2023.
According to CIEP data, 19.2 pesos for every 100 pesos comes from financing, which also represents a higher figure than in 2023, where for every 100 pesos, 14.2 pesos have financing as a source.
The reason why financing and debt will grow so much in 2024 is what is planned for public revenue: it will represent 21.3% of the product, a decrease compared to the 22.3% of GDP they represent in 2023. The reason is which is estimated to be a drop of 24.1% in oil revenue and (-) 1.5% for tax revenue (without IEPS).
The interesting thing about all this is that, despite this historical cost By the way, in an election year, and with the amount of debt, which will destroy the value of Fobaproa, a 55.8% reduction is proposed for the already damaged health sector. For reference, 21,623 million pesos will be allocated to IMSS-Bienestar, which is only 1.8% of what will be assigned to pay the interest on the debt.
Overall, most of this spending is for current spending, as investment spending, which accounts for 3.2% of GDP—or 12.2% of total net spending—will experience a decline in real terms. 11.1 percent.
All of this will make the idea of austerity difficult to sustain and, more importantly, represent a risk to Mexico’s credit rating.