Rogelio Ramírez de la O, Secretary of Finance and Public Credit, during his appearance before the plenary session of the Chamber of Deputies, on September 27, 2022. Mario Jasso (Cuartoscuro)
Mexico's Treasury Secretary, Rogelio Ramírez de la O, painted a positive economic outlook for the Chamber of Deputies on Tuesday, but warned that, despite efforts to maintain fiscal prudence, the country's debt has increased.
The agency expects gross domestic product (GDP) to grow 2.4% this year and up to 3% in 2023.
In an appearance, three weeks after sending legislators his proposal for next year's government budget, Ramírez de la O assured that economic growth will be driven by "the strengthening of the internal market and the relocation of companies to our country." .
The official also highlighted the investment made in the emblematic projects of President Andrés Manuel López Obrador, such as a refinery of the state company Petróleos Mexicanos (Pemex) and the tourist project in the Yucatan peninsula, the Mayan Train.
"During the first half of the year, economic growth in our country has surprised on the upside and has been above analysts' forecasts at the beginning of the year," said the secretary.
"To date, our economy has linked three consecutive quarters of expansion, in a context of strength in the domestic market, recovery of private consumption and tourism at the national level, as well as progress in public and private investment", added Ramírez de la O.
Despite the fact that the López Obrador Administration is one that has been characterized by austerity and resisted increasing spending to subsidize the unemployment generated by the pandemic, Ramírez de la O admitted that the country's debt has increased.
"In real terms, the increase in public debt, by the fourth year of the administration, will have increased 7% from the base of December 2018 when the fiscal management of this administration began," said the official, "it should be noted that this increase it is significantly lower than the average growth of 27% observed in the three previous administrations”.
In a report published on September 26, the credit risk rating agency Fitch warned of the increase in the cost of the debt and the overstitching of the president's infrastructure projects.
“The 2023 budget projects a 9.9% real increase in revenue compared to the 2022 budget, which would be only 0.8% higher than the current 2022 estimate, but a real increase in spending from the 11.6%,” Fitch analysts wrote.
“This is due in part to higher interest rates resulting in higher borrowing costs, but also to higher capital spending due to higher input costs, as the López Obrador administration looks to complete its construction projects. priority infrastructure (mainly the Maya and Istmo trains and the Dos Bocas refinery) before the elections.
On Tuesday, Ramírez de la O pointed out that eight out of every 10 pesos of the total net expenditure “corresponds to mandatory expenses, the most important being: the financial cost, pensions and retirement, contributions to states and municipalities, the expense of companies and entities, as well as the expense of autonomous branches.
The Organization for Economic Cooperation and Development (OECD) lowered its growth outlook for the Mexican economy to 1.5%, which last June it calculated at 2.1%.
For its part, the investment bank JP Morgan announced a 0.2% rise in its forecast for Mexican GDP, with which it expects it to grow 2.2% this year.
Compared to the largest economies in Latin America, Mexico is the only one that has not been able to recover the economic level it had before the pandemic began.
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