Economics: The 2024 budget proposal offers the same administration formula, although holes are increasingly apparent in the gov’t approach
Earlier this month, as President López Obrador approaches his final year in office, his administration sent Congress a 2024 budget package that was very much true to the tenor of its four previous iterations. It served up the same combination of austerity in many areas of public administration and a tough approach to tax evasion. But the latest economic data and the budget package itself lend credence to critics who have long warned that on AMLO’s watch government finances have gradually deteriorated, and that revenues have lagged, with fiscal deficits continuing to climb and public debt rising significantly, a development that thanks to the Super Peso is less apparent when such liabilities are expressed in local currency.
As results through the first half of 2023 show, the administration’s efforts to crack down on tax evasion and expand the tax base continue to sustain real-term growth in tax collections. However that has only barely managed to offset the sharp drop in petroleum-related revenues at a time when the government is accelerating spending as it gears up for next year’s presidential elections.
This week we analyze the administration’s 2024 budget proposals, detailing its strengths and weaknesses while pointing out the crucial issues that we should closely monitor in the coming months. We also argue that the budget confirms a less sanguine reality and highlights the need to construct a strategy to significantly expand public revenues, put an end to the squandering of Treasury resources and reverse the rise in government debt.
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