The Congress of the Union authorized a net indebtedness (Public Sector Financial Requirements, RFSP) for the public sector of 1.29 trillion pesos for 2023, an amount that means 23.4% or 294,000 million pesos above what was approved for the current year .
The figure represents 4.1% of the Gross Domestic Product (GDP), the highest proportion since what was observed in 2014, according to figures from México Evalúa and the Ministry of Finance and Public Credit (SHCP).
Debt is the third largest earner of revenue for the federal government.
“With this indebtedness it is intended to increase the Historical Balance of the Financial Requirements of the Public Sector to 49.8% of the GDP. However, we believe that this data is also overestimated since, again, it takes into account an unrealistic growth of 3%. If the economy grew 1.3% as most analysts calculate, the same debt will weigh more on a smaller economy, and will exceed 51% of GDP”, refers to an analysis by México Evalúa on the 2023 Economic Package.
The most serious problem, in the opinion of México Evalúa, is that the debt is on the way to becoming unsustainable.
According to Gabriel Yorio, Undersecretary of the Treasury, the proposed indebtedness is in line with the financial policy goal, which is to maintain indebtedness as a percentage of GDP in a constant and stabilized manner, which is why it is proposed at “49%; below 50%, which we have been continually discussing with the rating agencies,” the official pointed out.
However, since 2019 the “golden rule” of sustainable financing has been broken, which states that public debt must be at least the same level as physical investment.
Between 2012 and 2018, for each peso of indebtedness, 1.34 pesos were allocated to physical investment, but from 2019 to the estimated close of 2022, 80 cents of investment are spent for each peso of indebtedness, the rest goes to current spending, which is not it is sustainable, explained Jorge Cano, a researcher with the Public Expenditure and Accountability Program of México Evalúa.
But the Treasury rules out this scenario. “Indebtedness in Mexico has very clear legislation, at the highest level, which is the Mexican Constitution and the Federal Tax Responsibility Law, and which is that the debt must be used for productive public works and in that sense it will be used,” he added. Yorio before Senators in his appearance prior to the approval of the Federation Income Law.
And how much debt will be paid in 2023?
The Ministry of Finance and Public Credit (SHCP) reported in early September that next year will be next year.
The amount that will have to be disbursed is equivalent to 3.4% of GDP, an amount not seen since 1996, when it then represented 3.5%.