Mexico | The 2023 economic package keeps fiscal equilibrium with little room for maneuver

Summary

The economic package reinforces the commitment to fiscal discipline by setting a target of 0.2% of GDP for the primary deficit and stability around 49.4% of GDP for the public debt.

Key points

• Key points:
• Nevertheless, the GDP growth forecast of 3.0% for 2023 is optimistic in relation to our 1.6% forecast, the IMF projection of 1.2% and the expectation of 1.4% from the consensus of economic analysts.
• Given a realization of an economic scenario more in line with our forecast and the expectation from the consensus of analysts, the fiscal discipline in conjunction with the continuity of pet projects and the prioritization of social programs would imply expenditure cuts to other items.
• In the medium term a fiscal reform will be necessary after taking into account that pressure on public spending will continue from governmental support to Pemex, social programs, infrastructure deterioration, debt servicing costs and pensions’ payments.

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