Increase in social programs with Sheinbaum will take away fiscal space: Moody’s

He points out that greater rigidity in spending would complicate fiscal consolidation, which would lead to a growing trend in Mexico’s debt and exacerbate the difficulties in its affordability.

This is already affecting the government’s fiscal strength, which is a key consideration in Moody’s credit rating methodology.

Will AMLO take his hands off the government?

The rating agency also points out that AMLO’s future political role will be important.

“While former Mexican presidents often retire from politics, AMLO’s personality and broad influence could keep him involved in politics. His influence on the political agenda is uncertain due to a lack of track record.”

But the level of party discipline within Morena and the resolution of internal disputes are linked to AMLO’s role as absolute leader of the party.

“Its continued control could cause tensions in the context of a new presidency,” he warns.

The rating agency comments that Sheinbaum’s victory and the planned composition of Congress reinforce the perspective not only of continuity, but of deepening AMLO’s policies.

“Now that the elections are over, we hope that Sheinbaum’s policies will be clearer and provide a signal as to whether he will preserve, reinforce or reverse the trends that have begun to deteriorate Mexico’s credit profile.”