The Center for Private Sector Economic Studies (CEESP) stated that the pension for older adults and the Maya train will receive more money in the 2024 budget project than is allocated for the tasks of the Ministry of Education and the Ministry of Public Security and Citizen Protection.
“The pension for older adults and the Maya train total 585,000 million pesos or 61% of expenditures (for priority programs and projects of the administration of Andrés Manuel López Obrador) and 6.5% of the total budget. This is more than the budget allocated to the Secretariats of Education, Security and Citizen Protection combined,” said the organization headed by Carlos Hurtado López.
The sustainability risk could arise if revenues are insufficient and some important expenditure has to be incurred as part of the state’s public services, said the economic advisory body of the Business Coordinating Council (CCE).
The Federation Expenditure Budget Project proposes to reduce the Ministry of Health’s expenditure by 55.8% compared to the expenditure approved for 2023, although this is due to the fact that large resources are earmarked for IMSS well-being, he explained.
“A large portion of the Ministry of Health’s budget will be transferred to the IMSS Wellbeing Program, about P128,000 million. Adding both, expenses comparable to those of the Secretariat this year would increase by 2.7% in 2024,” he explained.
Spending on education, security and citizen protection increases by only 1%: “It is also very worrying that even with the government’s flagship projects – the Dos Bocas Refinery, the Maya Train and the Trans-Isthmic Corridor – physical investments are expected to increase by 23, 0%,” says the research center.
On September 8, the Ministry of Finance and Public Credit submitted the 2024 economic package to the Chamber of Deputies for discussion and approval. It includes the Income Law Initiative (LIF), the Federal Expenditure Budget Project (PPEF) and the General Economic Policy Criteria for this year.
Following its analysis, the CEESP concluded that the budget proposed by the executive branch does not sufficiently fulfill the purpose of ensuring economic stability during the political transition next year, given the significant risks that exist.
In the macroeconomic framework for 2024, he added, the optimism on which the public revenue calculations of the Income Law are based prevails.
The Ministry of Finance forecasts economic growth between 2.5 and 3.5%, well above the range expected in the preliminary criteria for 2024 last April (1.6-3.0%) and the estimates of specialists, which is around 1.7%.
The agency responsible for Rogelio Ramírez de la O forecasts that public revenues for next year (7.3 billion pesos) will represent 21.3% of GDP, one percentage point below what was approved for 2023, four tenths of a point below the estimated Value The lowest share in the six-year period and the second lowest since 2012.
“The income trend responds mainly to the decline in oil revenues (-11.3% compared to the 2023 estimate),” the study center said.
ISR collection is forecast to increase by 3%, VAT by 2.6% and IEPS by 32%. “These increases may not be achieved if official growth expectations are not met.”
The CEESP added that spending continues to rise sharply despite the weakness of income sources.
Next year is estimated at 9 trillion pesos, or 26.2% of GDP, which is four tenths of a percentage point more than the amount approved for 2023 and 1.2 points more than the final estimate for this year. Spending is 3.1 percentage points of GDP higher than in 2018.
“Pension spending and external debt service will increase significantly in the 2024 budget compared to 2023,” he warned.
He added that the combination of all public sector expenditures and revenues results in a public deficit (measured as public sector financial requirements, RFSP) that is at its highest level since its calculation.
“According to the official program, the traditionally calculated deficit will be the highest since the late 1980s. It amounts to 1.9 trillion pesos and represents 5.4% of GDP. In absolute nominal terms, it is 1.5 times higher than the deficit reported in 2022, but 3.6 times higher than in 2018,” he specified.
The balance of total debt (SHRFSP) will reach 48.8% of GDP, 2.3 points more than estimated for this year.
“Given this data on the fiscal deficit in 2024, many have said that the government is breaking its policy of fiscal discipline or debtlessness. But that is not correct,” he emphasized.
“The public sector has run a deficit during this term, its spending will have increased in real terms by almost 20% and its debt has not stopped growing.” This center has long insisted on this point. Although, according to the program, public debt to GDP will have increased by 5.6 percentage points of GDP under this government and will remain below 50%, this indicator obscures the extent of debt due to the importance of inflation and exchange rate appreciation. “, he noticed.
