Mexico | Oil-related income falls sharply below budget in 1Q25

Summary

The Historical Balance of Public Sector Borrowing Requirements (HBPSBR) was 51.4% of GDP at the end of 2024. We expect the HBPSBR to be 53.0% at year-end with a public deficit and PSBR of 3.8% and 4.3% of GDP, respectively.

Key points

• Key points:
• Taking into account the GDP growth forecast of 0.2% for 2025 from the consensus of analysts surveyed by Citi Mexico and debt servicing costs of 3.9% of GDP, our calculations show that the primary surplus would have to be 1.7% of GDP (a public deficit of 2.2% of GDP) to keep the HBPSBR at 51.4% by the end of 2025.
• In our view, it will be difficult to have a fiscal consolidation that reduces the public deficit from 4.9% to 2.2% of GDP in 2025 due to lower expectations for economic growth and less fiscal space to cut discretionary spending.

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