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By KELIN DILLON

According to new data from the Mexican Secretariat of Finance and Public Credit (SHCP), Mexico’s budget deficit shot up by 248 percent year-over-year during the first financial quarter of 2024, reaching a total of 452.37 billion pesos.

Mexico reportedly spent 2.319 trillion pesos compared to its 1.867 trillion peso income during the period, said the SHCP.

Likewise, the nation’s real annual deficit increase was registered at 324 percent.

Analysts say the rising deficit is due to factors like Mexico’s 5.2 percent drop in oil revenues from January through March, increased spending on social programs and other government initiatives.

HR Ratings Economic Analysis Deputy General Director Ricardo Gallegos characterized the deficit increase as in line with the Mexican government’s expectations while noting that the public deficit is expected to reach 5.9 percent of the nation’s gross domestic product by year’s end.

“If someone is scared by the deficit of the first quarter, wait for the second quarter because it will be higher,” said Gallegos. “In this first quarter, and during the second quarter we are going to see a very accelerated deficit because the idea was to close and execute a large part of the spending before the upcoming elections.”

Gallegos added that this spending level is not anticipated to continue in the coming years, but if this were to occur, Mexico’s credit rating would be put at risk.

“It seems to me that this is a sign that fiscal policy follows the political cycle more than the economic cycle,” added BBVA Chief Economist Carlos Serrano. “It seems to me that this is something that we should correct.”