Mexico’s Public Deficit Spikes by 24 Percent in 2022

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While Mexico has long been spending more than it brings in through revenue, 2022 saw the country’s public deficit increase by approximately 26 percent – the largest deficit spike it has experienced since 2016.

According to figures from Mexico’s Secretariat of Finance (SHCP), Mexico’s public deficit between January and November of 2022 stood at 611.1 billion pesos, a figure 25.9 percent higher than the year previous.

The 2022 deficit was only exacerbated by Mexico exceeding its planned programmable spending budget for the year by a reported 147.9 billion pesos, revealed SHCP data.

Mexico’s tax collections likewise stagnated throughout this same time period, lowering the nation’s annual revenue in turn. 

However, according to Monex Economic Analysis economist Janneth Quiroz, Mexico’s total revenue actually rose by 4.9 percent in 2022 despite the tax-collection stagnation, meaning Mexico’s increased annual public deficit was mainly the result of unanticipated overspending.

In spite of this 26 percent year-over-year increase in public debt, the 2022 public deficit turned out lower than initially estimated by the SHCP, which originally projected a 710.8 billion-peso deficit for the year. With that being said, 2022’s public deficit is the highest public deficit experienced throughout the six-year term of Mexican President Andrés Manuel López Obrador (AMLO) so far.

For Instituto Tecnológico Autónomo de México (ITAM) analyst and professor Víctor Gómez, Mexico must keep growing its financing sector to help deal with the public deficit, though the ITAM academic went on to note that the increased interest rates expected in 2023 will only make the cost of financing this public debt higher and could put the nation at risk of not being able to pay off its loans on the deficit.

On the other hand, Quiroz’s analysis of the current public-deficit situation was markedly more optimistic, with Quiroz noting that the actual 2022 deficit being lower than the SHCP’s estimate is a positive sign and that the government’s increased public spending could add renewed vigor to the Mexican economy.

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