Mexican President Andrés Manuel López Obrador defended Thursday that there is no indebtedness in his public budget for 2024, criticized for contemplating a public deficit of 4.9% of the gross domestic product (GDP), the highest in more than 30 years.
“There is no such indebtedness, year after year, when the budget is presented, a percentage is considered for debt contracting, based on what is expected to be collected and the works that have to be built,” the president said in his daily press conference.
“Then there may be a deficit, a shortfall, between what comes in and what is required to carry out public works, so there are parameters, we do not go beyond what Congress authorizes”, he added.
The opposition has accused of being “irresponsible” the budget bill presented last Friday to Congress by the Ministry of Finance, which foresees a real annual increase of 7.1% of the total net expenditure to 9.02 trillion pesos (about 530 billion dollars).
In the private sector, BBVA has described the deficit as “worrisome”, and CitiBanamex has opined that the budget “seems designed to win the elections” of 2024.
But López Obrador justified the deficit, arguing that it goes to public works, although 67.6% of total spending will go to social development, related to his social programs.
“All this debt that they are going to authorize, if they decide so in Congress, is for works, because before they did not even comply with the purpose that public debt can only be contracted for a specific work,” he said.
The Center for Economic Studies of the Private Sector (CEESP) estimated on Tuesday that Mexico’s public debt will increase by 59% during López Obrador’s government, which began in December 2018.
Even so, the president asserted that his Administration will leave public debt at a level of 48.9% of GDP after receiving it at 43.6% in 2018, while his predecessors raised it by over seven percentage points.
He also argued that the debt increased relative to GDP “without recourse to credit” because of the more than 8% plunge caused by the Covid-19 pandemic in 2020.
“We are the country, possibly, with less debt after the pandemic, we did not request additional debt and it is a matter of analyzing what happened in the United States, what happened in Spain, what happened in any other country,” he said.
Although specialists urge a fiscal reform for Mexico, López Obrador vindicated his formula to fight corruption.
“If there is no corruption, the budget is enough and yields, and there is no need to increase taxes or put the country in debt,” he said.