XINHUA

Mexico’s public debt will remain stable over the coming years despite the damage to the economy in 2020 caused by the novel coronavirus (covid-19) pandemic, President Andrés Manuel López Obrado (AMLO) said Wednesday, Sept. 9.

AMLO’s administration submitted a budget proposal for 2021 that aims to reduce the so-called Historical Balance of the Public Sector Financial Requirements to 53.7 percent of the gross domestic product (GDP), down from the 54.7 percent expected for 2020.

“The purpose is to leave the public debt the same as we received it,” the president said during his regular morning press conference, accompanied by Finance Secretary Arturo Herrera.

According to Herrera, the reduction in debt levels will be achieved in part with the help of the “remnants” of operations carried out by the Central Bank of Mexico (Banxico), which the government expects to receive in 2021.

The remnants are derived from variations in foreign currency exchange operations, and by law must be used in part to reduce government debt, said Herrera

“We are expecting a minimum of about 150 billion to 250 billion pesos (about $6.97 billion to $11.62 billion), which would help to reduce the debt by around one more percentage point,” said the finance chief.

“The medium-term estimates that we have, once the covid-19 contingency passes, allow us to consider a route through which the debt as a percentage of GDP will decline throughout the entire administration.”

Mexico closed 2019 with public debt of 44.8 percent of GDP, but debt growth has been accelerated by the pandemic, among other factors.

The Mexican government estimates the economy will shrink 8 percent in 2020, but recover with 4.6 percent growth in 2021, according to the proposed budget submitted to Congress on Tuesday, Sept. 8.

Notwithstanding, outside and independent analysts have said that those figures are overly optimistic.

…Sept. 10, 2020