Mexico’s 2023 Budget Optimistic, Wider Revenue Prospects: Fitch

Mexico’s 2023 Budget Optimistic, Wider Revenue Prospects: Fitch

Rating Agency Analysts Fitch They warned that budget estimates for economic growth for 2023 Mexico government At 3%, “it’s optimistic and could lead to lower-than-expected income.”

This overestimation of the capacity that the economy will have to grow in the next year, may induce the government to finish depleting its financial reserves or even resort to spending cuts to meet the government’s fiscal deficit target, which was projected in the draft budget at 3.6. % dependent Gross domestic productthey confirmed.

For agency economists, the Mexican economy will barely make a 1.4% advance in 2023 and will have to overcome the risks of a US recession.

In a special analysis, which has no effect on the rating, they report that the 2023 budget, presented on September 8 before the Federal Congress, projects a real increase in income of 9.9% compared to 2022 and a real increase in spending. 11.6 percent.

Agency analysts, led by Carlos Morales, say that this increase in spending envisages higher interest rates as a result of Borrowing costs As well as higher capital expenditures due to higher input costs.

These costs will have to be paid before the elections scheduled for July 2024 β€œgiven that the AMLO administration (President Andres Manuel Lopez Obrador) seeks to complete priority infrastructure projects, especially the Maya and Istmo trains and the Dos Bocas refinery.” .

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