The nominal fiscal deficit stood at 3.4% of GDP in 2022 (below the MoF target of a deficit of 3.1% of GDP, but in line with our estimate and compared to a deficit of 2.9% of GDP in 2021), while the primary balance stood at a deficit of 0.5% of GDP (also below the MoF target of a surplus of 0.1% of GDP and compared to a deficit of 0.3% of GDP last year). The Public Sector Borrowing Requirements (PSBR), the broadest measure of fiscal balance, posted a deficit of 4.4% of GDP in 2022 (below the MoF target of a deficit of 3.8% of GDP).
The deviation in the fiscal balances is mainly due to lower-than-expected tax revenues.Oil revenues stood at 5.2% of GDP in 2022, in line with the MoF latest estimate, reflecting high average oil prices and a capitalization of the sovereign to PEMEX (the transactions are also recorded as an expenditure of the federal government, leaving the consolidated deficit unchanged). While tax revenues excluding gasoline excise tax grew at a solid 7.8% in real terms in 2022, they were 0.7% of GDP below the latest MoF estimate. We note the total cost of the policy to contain gasoline prices was around 1.4% of GDP (the loss of gasoline excise tax revenue, relative to the initial budget, plus the additional subsidy to the gasoline price), which was partially offset by excess oil revenues relative to the original budget of 1.3% of GDP.
Total fiscal expenditure stood at 26.5% of GDP in 2022, 0.2% of GDP lower than the latest estimate of the MoF. Financial cost stood at 2.9% of GDP, pressured by a high-rate environment, but 0.3% of GDP below the MoF latest estimate. Non-earmarked transfers were also 0.2% of GDP below the MoF estimate, which together with a lower than estimated financial cost more than compensated a higher programable expenditure, which stood at 19.9% of GDP (0.3% higher than estimated).
The historical balance of public sector borrowing requirements, the broadest measure of public debt, stood at 49.8% of GDP in 2022 (from 50.8% of GDP in 2021).
Our nominal fiscal deficit forecast for 2023 stands at 4.1% of GDP. Our nominal fiscal deficit estimate is wider than that of the MoF as we are less optimistic on GDP growth (1.3% versus 3.0%), oil production and also due to pressures from AMLO’s priority projects & programs. Debt to GDP ratios will likely remain contained at a level around 50% of GDP (our net public debt estimate for this year stands at 51.2%).