Sheinbaum will carry out fiscal consolidation to maintain investment grade

The impact of the change of government on Mexico’s macroeconomic indicators will be limited and the administration headed by Claudia Sheinbaum is expected to carry out a gradual fiscal consolidation that will prevent the loss of investment grade in the eyes of risk rating agencies, Citibanamex projected yesterday Monday.

In presenting an analysis of the country’s financial situation at the end of the second quarter, the institution considered that Uncertainty and the increased risks of observing negative scenarios imply a deterioration of financial variables, as well as an unfavorable impact on investment, growth and public finances..

Mexico will have a modest macroeconomic impactbut the room for manoeuvre to achieve fiscal consolidation, which were already narrow, they will narrow even furtherthe document reads.

Between January and April, revenues increased by 2.4 percent in real terms, but are 4 billion pesos below the budget of the Ministry of Finance and Public Credit, mainly due to lower oil revenues and lower-than-expected tax collection.

At the same time, public spending grew by 18.8 percent in real terms in the first quarter, the highest figure since 1990, comparable only with the 15 percent annual growth in 2009 when fiscal policy was used as a countercyclical measure to cushion the effects of the global financial crisis.

The new macroeconomic scenario has slight impacts on our public deficit estimates, since the negative effects of lower growth and higher interest rates are largely offset by those of a more depreciated exchange rate.It also foresees pressures on the stability of public finances in 2024 and 2025.