La Jornada: Public spending increased 3.5% annually in real terms: SHCP

Public sector spending amounted to 5 trillion 742 billion pesos in the first seven months of the year, data that shows a real advance of 3.5 percent compared to the same period in 2025, the Ministry of Finance and Public Credit (SHCP) reported yesterday.

According to public finance reports from January to July 2026, the Federation’s expenditures were lower by 438,703 million pesos compared to the 6,181 billion pesos approved in the budget for this year.

The Treasury highlighted that the main fiscal balances exceeded expectations, met the annual goals of Congress and reduced the budget deficit.

The agency indicated that spending on social development grew 9.2 percent in real terms annually, a rate higher than the average of 2.6 percent observed in the previous decade. In that sense, he pointed out that the real increases were 15.1 percent in health, 8.4 percent in education and 7.9 percent in social protection.

The above, indicated the SHCP, is “a reflection of greater coverage of the Wellbeing Programs.”

The Treasury reported that budget revenues grew for the third consecutive year, driven by the dynamism of the collection of value added taxes (VAT), special taxes on production and services (IEPS), with the exception of that applied to fuels, and higher oil revenues.

From VAT, revenues totaled one trillion 41 billion pesos, an increase of 9.9 percent in real terms annually, while from IEPS they amounted to 401 billion pesos, a growth of 2 percent in real terms compared to the first seven months of 2025.

However, income tax collection was one trillion 777 billion pesos, an amount that shows a drop of 6 percent compared to the January-July 2025 period.

Between January and July, the Federation’s income totaled 4 trillion 996 billion pesos, a real increase of 0.9 percent.

The federal government’s net debt, composed mainly of instruments in Mexican pesos at fixed rates and with long-term maturities, represented 48.3 percent of gross domestic product (GDP).

The historical balance of the public sector’s financial requirements reached 51.5 percent of GDP. The Treasury described this proportion as “moderate”, when compared to other emerging economies and Latin America, which reflects responsible fiscal management and prudent debt management.

From January to July, the financial cost was reduced by 4.9 percent in real terms annually and was 115 billion pesos below schedule. The Treasury attributed this to the appreciation of the peso and a liability management strategy to improve maturities and maintain good financing conditions.

In a previous statement, the Treasury indicated that it gives priority to the local market for financing and uses external markets strategically, according to the 2026 Annual Financing Plan.

He highlighted that the federal government’s net external debt fell from 23.3 percent in 2018 to 15.4 percent by June 2026. He noted that international issues refinanced operations and managed external debt, reducing the financial cost of the public sector.

The SHCP concluded its issuance program in external markets for 2026 on Thursday with an operation in the Samurai market for 1,774 million dollars, an amount that is within the debt ceilings authorized by Congress.