The Ministry of Finance released its public finance report for February, showing that the broadest measure of the public balance (PSBR) posted a deficit of 128 billion pesos as of February. Meanwhile, the primary balance stood at +78 billion pesos, compared to -275 billion pesos in 2024. This result was mainly due to a 17.0% YoY contraction in total expenditure, primarily from lower operating expenses, despite a 6.7% YoY growth in public investment. On the income side, a 4.8% YoY growth was supported by higher-than-expected import tax and income tax revenues, despite a significant contraction in Pemex oil revenues amid decreasing oil production and low oil prices. Government debt increased by 9.8% YoY, mainly due to external debt.
Our view: Despite a decrease in total expenses as of February, social-related items continued to rise, particularly pensions and retirements. Additionally, budget revenues increased at the start of the year, but maintaining this growth is challenging due to the forecasted economic slowdown and challenges from the international environment. For 2025, we anticipate fiscal consolidation with a nominal deficit of 3.9%, a contained net government debt of 51.8%, and a positive primary balance of 0.6% in a context of lower interest rates compared to the previous year. We think that despite some tailwinds for revenues, such as increased use of technology in customs and higher taxes on products from countries without a trade agreement with Mexico, more aggressive measures will be needed in 2026.
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