By KELIN DILLON
While Mexican President Andrés Manuel López Obrador (AMLO) is expected to present Mexico’s 2022 Budget to the nation’s Congress on Wednesday, Sept. 8, the country is not expected to have any significant advances in public spending due to a number of debilitating economic factors brought on by the effects of the year-and-a-half-long covid-19 pandemic.
During 2020 and 2021, Mexico experienced stunted economic growth, went deep into its trusts and funds, and had lowered tax collection due to coronavirus, all ultimately impacting the 2022 budget.
Likewise, Mexico is expected to have lower oil revenues than before due to new international legislation on both the environment and hydrocarbons, holding back the nation’s revenues after it went all in on state-owned oil company Petróleos Mexicanos (Pemex). The budget presentation is expected to continue to cater to Pemex through its accompanying reforms to the Federation’s Fiscal Code, reducing the company’s tax burden and exempting it from tax payment in 2022.
The other reforms to Mexico’s fiscal practice will continue to focus on the administration’s fight against tax evasion, while failing to implement any changes in collection practices, thus continuing to limit Mexico’s tax intake and ultimately reducing the funds available for the future budget.
“Expenditure will be tight and highly concentrated on social programs and AMLO’s favored projects, the Tren Maya, the Dos Bocas refinery and the Santa Lucía airport, but with little room for other large infrastructure works and to reverse the decline in the public investment,” said chief economist at Grupo Financiero BX+ Alejandro Saldaña on the matter.