Mexico’s debt skyrockets! It is expected to exceed 50% of GDP by 2023

Mexico’s debt level shows a steady upward trend over the next few years. Mexico’s net government debt will grow 51 percent of GDP in 2023, up from 49.1 percent estimated this year, according to the International Monetary Fund (IMF). The agency noted that there will be an upward direction to the 52.2 percent level in 2027.

(El Financiero).- The administration of President Andrés Manuel López Obrador will surpass the 50% level of its net debt as a proportion of GDP. In 2024 it will continue to rise to 52.2%, its highest level since 1990 according to data from the International Monetary Fund (IMF) Fiscal Monitor report.

The IMF groups countries into five ranges of indebtedness and assigns a color for each one, from those whose debt is less than a quarter of their GDP in gray; those between 25 and 50 percent of GDP in yellow; in orange those countries with debt of 50 to 75 percent and in red those with debt between 75 and 100 percent of GDP and a dark red tone for those with more than 100 percent of GDP where advanced economies such as Japan and France with debt equivalent to 172.6 and 100.3% of GDP, respectively, are located.

Mexico is currently among the 26 countries colored yellow for having a debt of between 25 and 50% of GDP; as of 2023 it will move to the orange group of 23 countries whose GDP is estimated to be between 50 and 75% of GDP, according to the IMF’s database and projections.

Mexico will stabilize its surplus as of 2024

This year, Mexico’s government will achieve a fiscal surplus of 0.8% of Gross Domestic Product (GDP) in its public finances, after a deficit of 0.01% in 2021. Although it is estimated to weaken in 2023 to 0.3%, it will strengthen to 1.9 percent of GDP in 2024 and will remain at that level until 2027, according to IMF estimates.

The numbers projected by the organization for public finances make it foresee that in the administration of President Andrés Manuel López Obrador, the average primary balance for the six years will be a surplus of 0.65%, similar to the average obtained during Enrique Peña Nievo’s administration of 0.64%, according to IMF data.

Government revenues are estimated to be equivalent to 24.6% of GDP in 2022, an increase of 1.3 percentage points over the previous year, and by 2023 they are projected at 24.4% and, according to IMF projections, will stabilize at that level in the following four years.

During this and the following year, public spending will show an increase to 28.4% and 28.5% of GDP, respectively, from 27.1% in 2021.

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