Mexico’s public budget for 2024 seems designed so that the ruling party wins next year’s elections, leaving the next Administration limited with the end of the austerity policy, the Citibanamex bank considered this Tuesday.
“The budget seems designed to win the elections and face, at least partially, the fiscal realities,” the banking institution indicated in a timely note after the presentation of the economic package to Congress by the Mexican Government on September 8.
According to the analysis of the Directorate of Economic Studies of Citibanamex, the latest public budget proposal during the Government of Andrés Manuel López Obrador is not inertial, it is designed in a different way and contains a motivation other than “hyper-austerity.” from previous years.
“The main social programs will reach 741,000 million pesos (about 43,000 million dollars) (2.2% of GDP) with significant growth in monetary transfer programs that most directly benefit the base of AMLO (López Obrador) and Morena (his party),” he added.
Furthermore, Citibanamex considered in its most recent report that the budget deficit that the Government will reach of 5.4% is higher than expected, although it warned that “budgets are usually optimistic and that downward errors tend to occur.”
And he maintained that some macroeconomic perspectives are “clearly optimistic,” such as 3% growth for the Mexican economy in 2024, contrary to the 1.4% estimated by Citibanamex or 1.7% of the consensus of private analysts.
Likewise, he hoped that With this budget project, the next Administration will be left more limited and with a difficult fiscal perspective.
In this sense, he contrasted that the López Obrador Government changed its perspective of tightening and austerity, given a dynamic of growing debt.
“Budget 2024 allows a truer reality to emerge: The fiscal stance does not have the firm basis that was commonly assumed. Going forward, the next administration will face a more complicated fiscal landscape, one that will require tax reform,” he added.
Citibanamex stated that the net debt goal at the end of the López Obrador Administration would end with 5.2 percentage points of GDP above the end of the previous six-year term, “and although its level would remain relatively comfortable at 49% of GDPthe trend would be a cause for concern.”
Finally, he considered that “The deterioration of public finances complicates the work of Banco de México (Banxico) and could lead to a downgrade of the credit rating.”
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