The fiscal inheritance for the next administration will be complicated, warned the sovereign analyst of Moody’s for Mexico, Renzo Merino.
The fiscal margin of maneuver to respond to shocks is still manageable and will still be enough to hold Public finances stable a couple more years, he considered. But the uncertain world context and the impact of inflation on interest rates and debt interest are risk factors for the sovereign note, which today is two levels above investment grade, at “Baa2” with a stable outlook. .
By participating in the annual seminar of Moody’s Inside Latam Mexico, commented that the current administration has exhausted the fiscal buffers that the government had. He highlighted that at the start of the six-year term, the Budget Revenue Stabilization Fund (FEIP) had resources close to 1% of GDP that were at a minimum since the end of 2020. These resources, plus those held by the various trusts, helped the government in the first three years of the administration to offset the budgetary impact that it would have had. the overestimation of economic variables such as GDP on public revenue calculations.
But that fiscal margin of maneuver that allowed the government to end the fiscal years with a fiscal deficit of three points of GDP is increasingly reduced, and has become a downward risk factor for the administration, he stressed.
Renzo Merino said that when comparing the country with other sovereigns that have the same rating, Mexico still has institutional strengths: “We see commitments from the fiscal and monetary authority to limit the deterioration of macro conditions in the country.”
He argued that Mexico is two levels above the investment grade and that to think of losing Investment Grade, the public debt would have to rise significantly, or that the prudence of the management of monetary and fiscal authorities leaves the current scenario.
Moody’s It is the rating agency that has Mexico with the highest score among the sovereign agencies with the largest worldwide operation.
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