Despite adhering to the fiscal discipline followed by Andres Manuel Lopez Obrador’s administration, the public debt of the Mexican government will continue to fluctuate above 60 points of gross domestic product (GDP) between now and 2026, experts from the International Monetary Fund (IMF) predicted).
At the end of last year, government debt reached a record high of 60.6% of GDP, which includes a historic increase of seven points in GDP in 12 months, as a result of the impact of the lower exchange rate on debt metrics and the collapse of economic activity resulting from the Covid crisis. -19.
The aforementioned measure includes the liabilities of all public institutions including Petróleos Mexicanos, the Federal Electricity Commission, Social Security Funds, and government debt in its three orders: Federal, State and Local.
According to IMF projections, included in its radial semi-annual report on the state of public finances, the Financial Monitor, the public debt of the Mexican government will moderate slightly in the index during this year and next year, resulting in an average equivalent to 60.5% of GDP.
This share of government debt could increase slightly to 60.7% of GDP from 2023 to 2025 and will peak at 60.8% of GDP in 2026.
In the document, issued by Washington by IMF Finance Director Vitor Gaspar, they highlight that the budget policy in Mexico has remained unchanged from that applied in 2020, with modest financial support to mitigate the impact of the epidemic on families and small businesses.
No increase in income
Without an incentive to accelerate oil profits or collect taxes, the fund estimates that the Mexican government’s overall revenue will be 23.3% of GDP at the end of the year.
This forecast includes a decrease from the peak reached last year, when it recorded an income equivalent to 24.6% of GDP; A breakthrough explained by the policy of canceling fiscal concessions that forced taxpayers to cancel their debts.
International Monetary Fund experts expect this resource flow to continue to decline to 22.9% of GDP if there is no source of income.
Vaccines are the best investment
At a press conference, Vitor Gaspard stressed that the public resources devoted to purchasing vaccines can be considered a fruitful investment, as it will allow the economic recovery to accelerate.
In the document, they estimated that if vaccination helped control the virus, more than $ 1 trillion in additional tax revenue could be raised by 2025 in advanced economies.
The expert from the IMF stressed that despite the increase in global debt, which may reach 99% of the average GDP, it is not yet time to withdraw financial incentives and support.
He said it should be targeted in a focused manner, particularly at companies that could have a financial viability in reopening.
For advanced economies, the agency estimates average debt at 120% of GDP, highlighting cases of the United States, whose public liabilities will reach 132% of GDP, and Japan, which estimates government liabilities at 256.5% of GDP. .