Mexico | 2020 Economic Package reinforces signals of fiscal discipline

Summary

Economic package reinforces signals of fiscal discipline by establishing a primary surplus target at a weak period of the business cycle.Consequently, it is positive that the federal government has proposed a primary surplus of 0.7% of GDP instead of the 1.3% that it had suggested in Pre-Criteria of economic policy for 2020

Key points

• Key points:
• However, the assumptions of the economic package face two main risks: i) lower economic growth than expected due to global and domestic factors, and ii) lower oil production than expected
• It is therefore advisable that, once the economic growth figures for the first quarter of 2020 are available, any adjustments necessary to meet fiscal targets should be made
• It is positive that the economic package addresses the fight against tax evasion, fraud and avoidance, although its contribution to tax revenues is uncertain
• The federal government should consider a comprehensive tax reform as soon as possible

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