Mexico | Positive signals from the 2025 economic package

Summary

A lower deficit will promote more stability of the public debt-to-GDP ratio in the future, but the optimistic assumption of economic growth prompts us to foresee a Historical Balance of Public Sector Borrowing Requirements (HBPSBR) of 52.9% vs. 51.4% of GDP anticipated by the Finance Ministry.

Key points

• Key points:
• The 2025 economic package was built under an economic growth expectation above the consensus and our forecast.
• Inflation (3.5%) and interest rate forecasts (monetary policy rate of 8.0% by year-end) are in line with our estimations.
• A gradualist strategy is adopted (two years) to reduce the deficit; a fiscal consolidation of 2 percentage points in 2025.
• Given the mounting challenges to public finances in the coming years, it is still necessary that this government designs and implements a fiscal reform that increases tax revenue.

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