The economic package presented by the Ministry of Finance to the Congress of the Union has been intensely criticized by most private economic analysts, who consider that it poses very optimistic variables.
They even warn of the possibility that by not materializing, the Mexican government will have to resort to greater indebtedness or budget cuts.
But what is the person in charge of the country’s public finances, Rogelio Ramírez de la O (RRO) observing? What are the data on which he proposes the projections of the main economic variables?
To begin with, the official considers that the 2023 economic package is responsible, balanced and realistic.
That the estimates and projections are prudent, given the complex international context and the uncertainty about the global economy.
And, although it does not take extreme scenarios for granted, it is prepared to face shocks or eventualities.
These are the general bases of the perspective of the Ministry of Finance. The official variable that has generated the most doubts among non-governmental experts is that of economic growth for 2023 projected in a range between 1.2 and 3.0%.
On this point, the head of the Treasury notes that, since the second quarter of 2022, Mexico’s GDP has reached 97.9% of its pre-pandemic level, with growth of 2% in the first half of 2022, after a growth three consecutive quarters.
The fragility in public finances observed by non-governmental economists simply does not exist from the fiscal perspective. On the contrary, they are convinced that the current government is achieving the strengthening of public finances and is advancing in achieving a favorable position of Mexico to the world.
From his point of view, maintaining the economic recovery and macroeconomic balances have been the priority.
Tax planning, says Ramírez de la O, takes into account the challenges of the national economy, without assuming tail risk scenarios, those unexpected events or those that have a small probability of occurring, such as it would be a recession in the US.
Consequently, the Mexican government rules out a possible recession in the United States.
However, it is prepared for shocks or eventualities, in which case it will make the necessary adjustments to its strategy and economic package for 2023.
As for inflation, he acknowledges that Mexico is suffering from a rise in price levels not seen in decades.
However, it notes that inflation expectations have remained anchored, despite global commodity prices hitting all-time highs.
And with the Package Against Inflation (Pacic) and the incentives for gasoline to limit the price at gas stations, an inflationary transfer of 3.55 percentage points and an inflation of 12% has been avoided.
Employment, according to fiscal data, has remained strong, particularly in commerce and services. Reached record highs of more than 21 million workers, surpassing pre-pandemic levels, since October 2021.
Private consumption has also strengthened. Sales in supermarkets and department stores have already surpassed their pre-pandemic levels. In addition, public finances -notes RRO- Mexico, compared to other emerging economies, has one of the highest levels of international reserves: 200 billion dollars plus the Flexible Credit Line with the IMF of 50 billion dollars.
Public debt remains stable and sustainable, which has been recognized by global sovereign rating agencies.
In this year 2022, 6 of 8 ratified their ratings for Mexico, and seven maintained a stable outlook.
The Secretary of the Treasury recognizes that Mexico cannot have a successful development on its own and is therefore promoting the North American region as a priority on the agenda of Mexico, the US and Canada.
In this context, the nearshoring or relocation of companies is an opportunity to strengthen the region.
Such are the reasons of the head of Mexico’s public finances. Let’s see.