2024-04-10 13:40:37
Stabilize public debt in 2025, as stated Hacienda with a spending cut, it can stop the new Governmentfinancial experts agreed.
For Diego Diazcoordinator of Public Finance of the Mexican Institute for Competitiveness (IMCO), cutting programmable spending, will curb public services in the first year of whoever wins the presidential election, “that may have implications… for him to fulfill some of his campaign promises.”
He highlighted that this effort of fiscal consolidation They want to do it with less spending and what is needed is a tax reform that generates more resources and can have better effects at least in the first year of the new Government, he insisted.
“From this perspective, we see that Hacienda proposes that income remain practically identical to those of 2024, which would generate real growth of 0.5%”.
He also warned that it is not correct to cut spending in a context of the phenomenon of nearshoring, where they are relocating to Mexico global value chains and we need public resources in different areas to be able to improve the infrastructure that this requires (roads, security, clean energy and water).
He added that “proposing a budget cut to programmable spending that also includes investment spending in a year like 2025 in which this type of significant investments are required could have implications for the country’s capacity (…) from this perspective it can be detrimental,” added the researcher from the IMCO.
The Ministry of Finance presented the PreCriteria general of Economic policy
as the law establishes to outline the Economic package 2025, where it is structured around a large cut in public spending.
In the document, Hacienda indicated that it seeks to reduce the public deficit of the 5% al 2.5% of the GDP of 2024 a 2025, cutting net spending 8.8% in real terms to go from a budget of 9.14 billion pesos in 2024 to 8.66 trillions of pesos in 2025.
He financial cost of the debt would reach 1.23 trillion pesos in 2025, an amount that is equivalent to 14.2% of the estimated expenditure for that year.
Diego Diaz He added that cutting resources for the following year has two readings, the first is that public finances must be cleaned up and this can be valuable to reduce the deficit, but on the other hand, it can affect the provision of goods and services if taken into account. Keep in mind that spending reductions can reach 600 billion pesos, 12.1% in real terms.
He explained that the Pre-Criteria General terms are a document with which the budget is planned, but eventually an Income Law will have to be approved and the Federation Expenditure Budgetbut until then we will know what the margin of maneuver will be for the next Government to arrive at the National Palace.
The date could be November 15, when the 2025 Economic Package, “This is still several months away.”
Until then it will be known what the priorities of the new Government of the country and whether or not you decide to continue with this proposal of the current Secretary of Finance, that at the end of the day your project may remain a simple suggestion.
About, Fernando Monreal, economic analyst Citibanamex, He explained that stopping the spending “will be difficult to achieve.”
“In our opinion it will be something difficult to achieve, since to keep the debt constant as a percentage of the GDP in 50.2% It would be necessary to cut spending by 2.9 percentage points,” he explained.
Monreal pointed out that the legacy of the current Government in public finances it will be an increase in debt.
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2024-04-10 13:40:37