MEXICO – Fiscal path on track as of August

The Ministry of Finance (MoF) released its public finance report as of August. On a 12-month rolling basis, the broadest measure of the public balance (PSBR) posted a deficit of 4.1% of GDP through August, while the primary public balance swung to a surplus of 0.7% of GDP. During the first eight months of the year, real revenues rose by 8.4% YoY, supported by higher-than-expected import taxes and VAT revenues, despite a significant contraction in Pemex oil revenues amid decreasing oil production. On the other hand, total expenditure contracted by 3.6% YoY in real terms, primarily due to lower administrative expenses and capital investment. Finally, net government debt stood at 49.5% of GDP, below the MoF’s 2025 forecast of 52.3%.  

Our view: August’s figures indicate that the pace of revenue improvement continues to slow. Expenditures declined, reaching 94.9% of the budget as of August, primarily due to cuts in public investment. For 2025, we anticipate fiscal consolidation with a nominal deficit of 4.0% of GDP, a rising net government debt of 52.3%, and a primary surplus of 0.3%, in a context of lower interest payments compared to the previous year. Despite the measures included in the 2026 budget to increase revenues, such as increased use of technology in customs and higher taxes on products from countries without a trade agreement with Mexico, we believe additional revenue-enhancing measures may be needed in the future. We also remain cautious regarding the sustainability of continuing transfers to Pemex to meet its increasing market debt and bank loans obligations.

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