The Mexican government is working on a public investment portfolio and strategy (the magnet of attraction for private investments) to make it grow above the medium-term trend and boost the long-term growth of the Gross Domestic Product, reveals the Secretary of Finance and Public Credit, Edgar Amador Zamora.
Among the tax objectives is to maintain the path to reduce the fiscal deficit, increase revenues to strengthen public finances and improve the status of the country’s two main energy companies: Pemex and CFE, maintain and improve Mexico’s credit rating and increase public investment, to boost the economic growth of the Gross Domestic Product.
The person responsible for public finances observes the national economic behavior with optimism.
During a radio interview, on Grupo Formula’s Formula Financiera, the Secretary of the Treasury ruled out a possible inflationary impact due to the increase in Special Taxes on Products and Services that the government will charge from 2026.
“Health taxes” (as they are popularly known) and others would not have to have a permanent impact on consumers, he says.
From their point of view – although in the public discussion changes in the legal framework are pointed out: judicial reform, protection reform and others, as a source of uncertainty for business – investors and businessmen are more focused on the long-term potential of the country.
As proof, he refers to the behavior of Foreign Direct Investment (which he says reaches record levels); the unemployment rate, near historic lows; consumer confidence at levels higher than medium-term average rates; the exchange rate, solid and with a lot of liquidity and depth and the notable drops in both short and long-term interest rates and the financial and operational improvement of Pemex and CFE and the good performance of the Cedit Default Swaps (CDS) – equivalent to risk insurance in Mexico, which have dropped from a level of 180 to around 93 basis points.
Faced with the recent data that shows an economic contraction of 0.3% for the third quarter of the year, he affirms that it is “something temporary” that is explained by the adjustment of US trade policy.
He affirms that the Mexican economy does not register widespread weakness. It is a contraction focused on some sectors of industrial activity.
Regarding the fall in Gross Fixed Investment (2.7% monthly and 8.9% year-on-year), the official points out that it is a “statistical effect” when comparing the data with respect to last year when record levels were reached due to the conclusion of large infrastructure projects such as the Mayan Train, the Isthmus projects, the refineries and other large scale projects.
However, in the medium-term trend, the behavior of the IFB, he asserts, a very similar growth is observed. However, it recognizes that the government needs to make it grow more and that is why it is working on a portfolio and investment strategy to emphasize public investment specifically in machinery, equipment and physical capital, oriented towards infrastructure, because it is that type of investment that will allow raising the growth rate of the Gross Domestic Product in the long term.
That is the spirit of Plan Mexico – he emphasizes – if Mexico manages to reduce the imported component of its exports by 10 percentage points, it could add an additional 1.7% to the long-term Gross Domestic Product.
Amador Zamora emphasizes strengthening tax collection, as a solid foundation for public finances.
The tax revenues that represent the majority of the federal government’s collection, it reports, are projected to reach 15.1% of GDP.
That is the all-time high number in the country’s modern history.
It is estimated to add around 0.7 additional points of GDP to bring it to 15.1 percent.
Compared to what was collected in terms of taxes, tax revenue, 10 years ago, the figure was close to 12 percentage points of GDP.
In the last seven years, tax revenues have increased by more than 3 percentage points of GDP, which gives very important solidity to the financing of the budgets.
He points out that a few decades ago public finances depended on oil revenues.
They were a very volatile component in budgeting and tax revenues.
Now, Mexico is approaching the average of countries of similar development.
Mexico is making progress in consolidating a much more solid long-term financing pillar in public budgets as it advances in the strengthening strategy.
Edgar Amador Zamora seems calm and confident that the Mexican economy will manage to overcome the international and local circumstances and will consolidate a trend of greater long-term growth. Hopefully.
