The Ministry of Finance and Public Credit (SHCP) seeks to revive the emergency fund that was used in 2019 and 2020, derived from the economic fall and the stoppage of activities due to the outbreak of the covid-19 pandemic.
The 2023 economic package contains a reform to the Federal Budget and Treasury Responsibility Law to strengthen the Budgetary Income Stabilization Fund (FEIP), which is at minimum levels and is used to face financial emergencies in the public sector.
“This takes on particular importance in light of the change that has been taking place in international financial markets in recent months towards less favorable liquidity conditions and in view of the prospect that our economy will have to endure conditions of higher rates or availability of loans in coming years. less liquidity in said markets”, refers to the justification of the reform proposal.
According to the proposal to add articles 21 and 23, the objective is to expand the sources of resources allocated to the FEIP, through two channels: through savings in the financial cost of public debt; and make additional contributions to this fund during the fiscal year, consisting of financial assets.
“Currently in the law, the rules to replenish these funds are a bit complicated (…) if there are changes that facilitate the way to strengthen these mattresses that the government had, and today, they have already been used almost in their entirety , yes, it could be a positive factor going forward to give a little more fiscal space to the government, to the current one or to the following ones, to be able to react on the fiscal policy side to any next shock”, commented the sovereign analyst of Moody’s Investors Service, Renzo Merino.
The FEIP in minimum and without transfers
Until the end of the first half of 2022, the FEIP reported 24,986 million pesos (mdp), the lowest amount since the end of 2012, detailed figures from the Treasury.
Currently, the FEIP is fed by two sources: transfers from the Mexican Petroleum Fund; and by financial products and surplus income, that is, when more income than programmed reaches the public coffers, explained José Luis Clavellina, director of Research at the Center for Economic and Budgetary Research (CIEP).
In January of this year, 8,160 million pesos (mp) were transferred to the FEIP, the same amount reported at the end of January-July, in the months after January and until July no transfers have been reported, even when the Treasury reports income oil surpluses and ISR at the end of July.
The situation is that before the excess income goes to the stabilization funds, it is that they first have to help cover missing income, for example, for a social program, or be transferred to the natural disaster fund or pay for increases in costs to generate electricity, “if it is left over, after all that, it goes to the funds”, concluded the CIEP specialist.