Mexico City.- Claudia Sheinbaum begins her six-year term with a financial crisis, since public sector income is stagnant as a proportion of the Gross Domestic Product (GDP), indicated Mexico, how are we doing?
In 2019, at the beginning of the Presidency of Andrés Manuel López Obrador, public revenues represented 21.4 percent of the GDP, in 2024 it is estimated that they will be 21.3 percent of the GDP, and in the medium-term projections it is expected that they will not exceed the 21 percent of GDP, the organization indicated in an analysis.
An element that reduces the vigor of public income is oil revenue, which in 2019 represented 3.8 percent of GDP and by 2025 it is estimated to be 2.7 percent, once the reduction of the Shared Profit Right (DUC) is implemented. from 65 percent in 2019 to 30 percent in 2024. “This means that Pemex increasingly shares less of the income from hydrocarbon extraction with the federal government.
“In the six-year period that begins, the strategy around condensates and their use in national refineries that are not profitable compared to the possibility of exporting them and making profits will be relevant in the restructuring process of Pemex towards a profitable company,” he indicated.
Another point that Mexico highlights, how are we doing? to point towards sustainability in public finances is economic growth, since less dynamism in the economy reduces tax revenues (which represent around two-thirds of total public revenues), limiting the margin for public spending in key areas such as health, education and security. “In addition, the weak economic activity affects the public balance and increases the proportion of debt to GDP,” he added. Regarding the balance of the public sector, the organization highlighted that the deficit, measured through the Public Sector Financial Requirements (RFSP), went from 2.3 percent of GDP in 2019 to an estimated 5.9 percent of GDP in 2024. The above reflects that public revenues are not sufficient to cover expenses, including the annual commitments of Petróleos Mexicanos (Pemex), the Federal Electricity Commission (CFE) and the development banks. “Sheinbaum assumes the Government with the challenge of implementing a strategy that reduces the public deficit, with special attention to the RFSP, the broadest measure of debt. “This strategy must have achievable objectives and be accompanied by transparent communication with investors and citizens on the use of debt, without compromising the rating of the sovereign debt,” he said. Without a clear prospect of higher revenues in the short term due to the lack of tax reform, fiscal consolidation, that is, the reduction of the deficit, will have to be carried out mainly through cuts in public spending, warned Mexico, how are we doing?
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