Failure to achieve growth for the , as proposed by the Treasury secretary in the economic package, will put pressure on the country’s credit rating , warned Moody’s Investors Service sovereign analyst Renzo Merino.
“Yes, it could (put pressure), the fiscal-growth relationship is given by income, if growth is not so dynamic it could weigh on some types of income, there are other variables that clearly in the current context are much more difficult to forecast, such as the price of oil and fuels with very important dynamics in the current context, and we do not see that there will be a reversal of these dynamics going forward, in the case of IEPS, for example, and there is the issue of inflation; if there is more inflation it could help income,” said Merino.
The Ministry of Finance and Public Credit (SHCP) expects the Mexican economy to grow 3%, while Moody’s expects GDP to grow 1.0%. For inflation in 2023, the rating agency expects 4.7%, and the Mexican government that 2023 closes with an inflation of 3.2%.
“An underestimation of inflation and interest rates could complicate issues regarding the government’s interest burden, which would affect key issues and metrics for us from a sovereign perspective,” the executive said.
He stressed that the policy objectives and priorities of fiscal economic policy are very marked by the support for i projects that have promoted this administration, which will be maintained towards the end of the current administration and that absorb more and more of the Expenditure Budget of the Federation (PEF).
“In 2023 it will be more difficult to reach the prudent fiscal policy objectives, with the expectations that (Treasury) brings in the criteria,” considered the sovereign analyst for Mexico.
For the following year, the government plans an increase in the public debt of 30%, which will represent an expense of 1.2 billion pesos.
This will complicate the stability of debt-to-GDP metrics, as it can increase the interest burden versus income.
“What we see is that it will be more complicated in the coming years to maintain the stability of the debt-GDP ratio,” Merino said.