Photo: Luces del Siglo

By KELIN DILLON 

In new data revealed on Thursday, Jan. 6, by the Mexican Secretariat of Finance (SHCP), Mexico’s difference between income and public sector spending reached 472.8 billion pesos in 2021, the largest deficit the country has seen in the last six years.

Between January and November of 2021,  Mexico brought in some 5.2 trillion pesos through tax revenue, but spent another 5.7 trillion pesos on the public sector, revealed the SHCP. Throughout the same period in 2020 – and amid the economically devastating covid-19 pandemic – Mexico had a 441.9 billion peso deficit, 30.9 billion pesos lower than this year’s deficit.

While revenue did in fact increase by 5.1 percent from the year prior, the increased gains were not enough to eclipse 2021’s public expenditure.

Sofía Ramírez, an expert in the sector and the general director of the Mexico Economic Observatory, noted that 2021’s reported high inflation and low economic growth could have exacerbated the deficit, an issue expected to carry over into 2022 as the federal government’s elimination of trust resources by decree comes into effect.

“For this upcoming year, there are no resources left and we will be very pressured by potential lower growth rates below 3 percent, according to the Citibanamex and Banxico surveys, and therefore there will be a very significant decrease in tax revenues,” said Ramírez.

If Mexico does fail to expand beyond 3 percent economic growth, nearly 41.5 billion pesos less tax revenue will be collected than initially estimated, Ramírez went on to say, recommending the federal government to review its public sector spending plans and analyze pension coverage.

Chief economist of Banco Ve Por Más Alejandro Saldaña pointed out that the actual fiscal deficit is still hundreds of billions pesos less than the SHCP’s estimated forecast of a 622.3 billion peso deficit, though the secretariat will still need to push more financial support onto state-owned oil company Petróleos Mexicanos (Pemex) to keep the business sustainable and avoid a hit to the country’s credit rating.