Mexican President Claudia Sheinbaum on Friday ruled out the possibility of a tax reform for next year and affirmed that her government will focus on strengthening tax collection to finance the federal budget.
Although the government’s own projections suggest that by 2025 there will be a budget deficit of 3.2% of the Gross Domestic Product (GDP), Sheinbaum said in his morning conference that “there are many opportunities for collection without the need for tax reform.” deep.”
The president indicated that her administration will focus next year on “strengthening customs collection” and “reducing procedures” in the Tax Administration System to increase collection.
In that sense, the Secretary of the Treasury, Rogelio Ramírez de la O, admitted on Friday, during a session in the Chamber of Deputies where he presented the 2025 budget project, that tax collection will be the “main source” of financing the plan. of income next year, which was estimated at 8 trillion pesos (about 400,000 million dollars).
Ramírez de la O assured that the government will achieve historic tax revenues, which will represent 14.6% of GDP, “without creating new taxes or increasing existing ones in real terms.”
Mexico will end this year with a high fiscal deficit, which will be around 5% of GDP, and high levels of debt – especially from its state oil company – which has generated concern among analysts and rating agencies such as Moody’s, which changed its outlook on Thursday. Mexico’s rating to negative from stable but maintained long-term sovereign debt rating at Baa2.
Specialists have recognized that the fiscal deficit that will close this year represents a great challenge for the government and that the measures that will be applied in 2025 to balance the fiscal accounts will be insufficient, which could force Sheinbaum to resort to fiscal reforms. .
One of the biggest concerns of analysts focuses on the finances of Petróleos Mexicanos (Pemex), which carries a debt of 99,000 million dollars and that between next year and 2027 must make amortizations of almost 25,000 million dollars.
Before the presentation of the 2025 federal budget, Sheinbaum announced that “important changes are coming in the way the budget is distributed”, a “greater effort” of austerity and that there will be a reduction in the deficit, but did not offer details.
The president said that the austerity measures will not imply an impact on the country’s operations, social programs or public investments, but insisted that there will be “some adjustments.” “Mexico’s economy is solid, it is strong and we are going to move forward next year,” he said.
In the draft budget, the government estimated economic growth for next year between 2% and 3% of GDP, an inflation rate of 3.5%, a fiscal deficit of 3.2% and a public debt of 51.4%. % of GDP.
The director of economic analysis of the local financial group Banco Base, Gabriela Siller, considered the government’s forecasts “too optimistic” and said that it is “unlikely” that the projected deficit and debt will be reached, which increases the probability that the risk rating agencies cut the credit rating of Mexico’s sovereign debt.
In response to the Moody’s report that observed a weakening of Mexico’s institutional framework, Sheinbaum expressed doubts and expressed that “they would have to provide more arguments or evidence for this.” “Many times these rating agencies are oriented to evaluate based on an economic model,” he added.
The rating company recognized in its evaluation that the changes in the Judiciary promoted by the government—which propose a broad restructuring of the courts and the election by popular vote of judges and members of the Supreme Court—“threaten to erode controls and balances of the judicial system”, which would generate a negative impact on the economic and fiscal strength of the country.
“While our assessment of the quality of institutions in Mexico is already low… with regard to the rule of law and control of corruption, we will assess whether further deterioration of the policy-making framework and the independence of the “The judicial system could limit the government’s ability to address growing credit challenges,” the firm said.
The institutional weakening recognized by Moody’s represents an additional risk for the Mexican economy in the context of the possible review of the treaty between Mexico, the United States and Canada (TMEC) that will occur in 2026.
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