Photo: Fiona Graham / WorldRemit

By KELIN DILLON

Mexico’s public sector reached an unprecedented budget deficit of 1.153 trillion pesos between January and November 2024, demonstrating an annual increase of 39.1 percent, according to the Finance and Public Debt Report released by the Mexican Secretariat of Finance and Public Credit (SHCP) on Monday, Dec. 30. 

The federal government’s total income reached 6.797 trillion pesos during the first eleven months of the year, reflecting a modest annual increase of 2.2 percent. Notably, this amount exceeded the Mexican Treasury’s initial projections by 104.46 billion pesos.

In stark contrast, net budgetary spending soared to 7.95 trillion pesos by the end of November 2024, representing a real annual rise of 6.3 percent. The SHCP report underscored a historic monetary deficit for Mexico’s budgetary balance, calculated by subtracting expenses from the federal government’s income and directly controlled entities.

This unprecedented deficit has been primarily fueled by a sharp decline in oil revenues and rising financial costs associated with public debt. Between January and November 2024, total oil revenues for both the federal government and state-owned oil company Petróleos Mexicanos (Pemex) fell to 890.98 billion pesos, a 14.6 percent drop from the previous year, and significantly below treasury expectations.

 The federal government’s share of oil revenue, derived from extraction and processing activities through taxes and duties, suffered a 43.5 percent real annual decline during the same period, totaling 180.83 billion pesos. This stark downturn notably contrasts the 305.34 billion pesos collected in 2023 and the estimated 257.18 billion pesos for 2024.

This oil-related income was significantly lower than the treasury’s 305,336 million pesos collected in the same period of 2023 and the estimated 257,183 million pesos. 

Furthermore, Mexico’s financial costs (which include interest, fees, or other expenses incurred from public debt credits) increased by 4.3 percent annually in the first 11 months of the year. As of November 2024, these costs had risen to 928,377 million pesos, up from 849,761 million the previous year; however, this figure still fell short of the treasury’s projection by 89,709 million pesos.

Lastly, the Historical Balance of Public Sector Financial Requirements (SHRFSP), which consolidates all financial obligations of the Mexican Federal Government and its associated entities, reached 17.36 trillion pesos at the end of November, an increase of 11.6 percent compared to the same period in 2023.

These troubling trends signal ongoing challenges for Mexico’s economy as the government grapples with dwindling revenues and increasing fiscal pressures as the administration of President Claudia Sheinbaum prepares to enter 2025.