Economics: Mexico's public finances, Pemex and the CFE face mounting risks
The first half of 2026 reveals a fiscal fragility that the federal government has tried to ignore, and even to portray as evidence that public finances are strengthening. The fiscal deficit barely narrowed, while the primary balance collapsed—evidence that a growing share of debt is being contracted to cover financing costs rather than to fund productive investment. Tax revenues remain essentially frozen, propped up artificially by a surge in VAT and import-tariff collections (the durability of which is uncertain), while income tax receipts have contracted amid less effective enforcement. Faced with this revenue weakness, the adjustment fell on public investment—precisely the item with the greatest potential to drive future growth—even as current spending and payroll continued to rise.
Pemex, for its part, is experiencing a stagnation in its operating indicators that the official narrative disguises as stabilization: hydrocarbon production has stopped declining but has failed to recover, financial losses persist despite substantial government support, and the company continues to accumulate unrecognized liabilities to suppliers, unaccounted losses from flared gas and fuel theft, and internal accounting practices that artificially distort segment results. Compounding this is near-nonexistent private-sector interest in mixed contracts, casting doubt on the feasibility of recovering production over the medium term.
CFE faces a different but equally troubling dynamic: its revenues are stagnant and its profits have fallen, while its labor and pension obligations are growing rapidly as a result of earlier policy decisions, jeopardizing its long-term financial viability. Taken together, the picture that emerges is not one of fiscal consolidation or an operational turnaround at state-owned enterprises, but one of risks accumulating behind an official narrative focused on the nominal fulfillment of short-term targets—one that overlooks structural signs of vulnerability that could worsen in the second half of the year.
Regarding last week's indicators, Banxico announced its decision to hold the interest rate at 6.50%, in a unanimous vote. The decision was based on the fact that "between the first half of June and the first half of July, headline inflation fell from 3.55% to 3.1%, and core inflation eased from 4.12% to 3.95%." In doing so, Banxico glosses over the fact that the decline in headline inflation was driven by a sharp drop in livestock prices, which pushed the non-core component to a historically low rate—one that is likely to rebound in the coming months due to unfavorable weather conditions.
For its part, private consumption was reported to have grown 2.6% on a seasonally adjusted annual basis in May, averaging a 2.0% increase over the January–May period. This strong growth was driven both by spending on imported goods and a recovery in domestic goods. Also in May, gross fixed investment (GFI) rose 2.4% annually, its second increase after 20 consecutive months of decline, but leaving the January–May 2026 average in negative territory on an annual basis (-0.5%).
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