2023-10-23 14:00:00
The Chamber of Deputies ignored the International Monetary Fund (IMF), Bank of Mexico (Banxico) and specialists, who raised the alarm about the high fiscal deficit for 2024, which will put public finances and the country’s credit rating at risk.
In the early hours of last Friday, with the Morena majority in that chamber, a fiscal deficit of 5.4% of the Gross Domestic Product (GDP) and a debt of 1.9 trillion pesos was endorsed.
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Added to the above, experts warned, is the greater support approved for Petróleos Mexicanos (Pemex) and the Federal Electricity Commission (CFE) in the Federal Income Law (LIF) for next year.
The Chamber of Deputies majority endorsed a proposal presented at the last minute to lower the Shared Utility Right (DUC) rate that Pemex must pay from 40% to 30%, compared to 35% in the original initiative.
In this regard, the director of Economic Analysis of Banco Base, Gabriela Siller, pointed out that the government’s priority has been Pemex.
It is evident that it is a “bottomless barrel,” he said, because as long as the oil company’s business model is not fixed, it will continue to consume resources from public finances, putting the sovereign risk credit rating at risk.
Above all, Siller emphasized, because the money is not infinite and there is a high debt budgeted for the following year. Thus, more resources are being granted to an entity that does not produce results, she said.
He established that, although the DUC paid by Pemex will decrease in this government from 66% to 30%, this does not fix the business model.
What Pemex must do, he added, is sell strategic assets, to pay part of its debt and have leaner management, lowering operating costs.
Siller also warned that with the support that was approved for the CFE “a time bomb is being created.”
VIOLATION OF THE LAW?
The general director of México Evalúa, Mariana Campos, said that after the deputies did not take into account the opinions of the IMF, Banxico and analysts, the Income Law will not have problems also being approved in the Senate.
In the case of debt, there is a constitutional issue, because the law says that the debt cannot be used for current expenses, but rather for investment in works.
He recalled that there is precedent in the Supreme Court of Justice of the Nation (SCJN), because in the previous six-year term some opposition senators, including Mario Delgado, now president of Morena, demanded to include in the drafting of the Income Law that the debt was It will cover the difference between income and expenses.
In addition, they sought to promote an unconstitutionality action, and the SCJN responded that, since at that time the debt corresponded to the amount of investment, it was not appropriate. However, the Court considered that if the amounts had been different, the claim would have proceeded.
Campos considered that, although this precedent already exists, it is politically difficult for an action of unconstitutionality to advance due to the situation that the SCJN is experiencing.
Also because, if the deficit is cut, we have to see where the resources are going and, on the other hand, the opposition parties face political costs in an election year.
For this reason, he anticipated that it will be very difficult for there to be changes in the Senate on what was approved by the Chamber of Deputies.
He stated that, definitively, the fiscal risk in Mexico has increased, and this has to do with several factors.
One of them is that income has grown very little in this administration and, at the same time, many expenses and financial costs have increased, as well as transfers to Pemex and flagship works, which have generated cost overruns.
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