Thursday, September 28, 2023

The Treasury expects a fiscal deficit of 5.4% of GDP for next year, the highest since 1988

With declining oil revenues and growing spending, the Ministry of Finance and Public Credit (SHCP) expects next year’s budget deficit to reach 5.4 percent of gross domestic product (GDP), the highest since 1988.

Although the Secretary of the Treasury, Rogelio Ramírez de la O, assures that the measures of the latest economic package will allow a “smooth transition for the next administration,” it is conditioned that the debt contains the 48.8 percent, as a proportion of GDP , so that the incoming government will reduce the deficit by almost half, to 2.6 percent in 2025.

The current administration announced that it will leave the total public debt balance at 16 billion 787 thousand 906.1 million pesos, more than 10 billion 551 thousand 718.5 million registered at the end of 2018. This increase is due to the development the interest on obligations with the increase in interest rates, the placement of amortizations with higher rates and financing in this way skyrocketed this year, and especially next year.

The Treasury announced that the net financing will be 1 trillion 737 thousand 59 million, as a result of the expansion of contracting the internal debt up to 1 trillion 950 thousand 120 million pesos, while the reduction of the deficit in external obligations which are in productive State companies. ..

Reluctant to carry out a tax reform, the current administration is concentrating on tools against evasion and evasion of tax revenues, the policy of increasing revenues, but without separating itself, nor stopping to design those budget, which is partly based on the income from the sale of Petroleum.

They expect oil revenues to drop

Next year, it is expected that oil revenue will decrease by 332,707 million pesos compared to the estimate of 2023 in the Revenue Law. The agency has 100,042 more in non-oil tax revenues, although it is already expecting a decrease in consumption tax receipts; Another 83,978 million pesos came from organizations and companies other than Petróleos Mexicanos and 12,952 more from non-tax income.

Excluding the stabilization funds, which helped to compensate for the reduction in collection in 2019 and to a lesser extent in 2020, the Treasury estimates the income of 7 billion 329 million next year. Financing the remaining cost, which is equivalent to 9 billion pesos, will be done as a loan.

Nation World News Desk
Nation World News Desk
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