In 2018, the last year of the government in charge of Enrique Peña Nieto, the cost of the debt was above the physical investment, by a difference of 2,635 million pesos (mdp), at the end of 2019. And in the first year During the government of Andrés Manuel López Obrador, the cost of debt remained above 102,004 million pesos, while in 2020 it was 32,903 million pesos, the foregoing in relation to the falls in the Mexican economy and the stoppage of activities due to the covid-19 pandemic. 19.
But the story changed in 2021 and 2022, even in this last year, physical investment was 120,443 million pesos higher than the debt, with everything and the increases in the interest rate by the Bank of Mexico (Banxico) and central banks of the world that started in 2021.
This 2023 paints for another story, in the January-April period the rate hikes were already noted, so the debt was greater than the physical investment by 76,692 million pesos. Compared to the same period last year, there is an increase of 53.2%, and if April is only considered, the rebound is 85.4% per year.
The financial cost totaled 326,672 million pesos, and since the first quarter it reached its highest level in the entire millennium according to an analysis by México Evalúa. This increase is mainly explained by the increase in domestic debt and the increase in interest rates in Mexico, he added.
In terms of managing public money, it is preferable to have more investment than debt expenses.
Investment in infrastructure stimulates the economy and attracts private investment, for example, if you build a highway you create jobs, launch calls for government providers, facilitate logistics for the movement of people and goods, which in turn can attract private companies to provide transportation services, build hotels, restaurants, according to Christopher Cernichiaro, postdoctoral researcher at the Autonomous Metropolitan University (UAM).
Instead, the increase in debt interest payments has already caused cuts in programmable spending, which is focused on covering the budget of dependencies, investment or social programs.
“The increase in indebtedness and the financial cost of the debt show that the imbalances in public finances will continue in the future: if the Government continues borrowing in a context of high interest rates, it will end up inheriting a huge cost to the following administrations, which will be forced to further cut social spending and investment or continue with the spiral of ascending indebtedness”, warned México Evalúa.