Economics: Public finance results in May show some positive results but not enough to forego a further deterioration

MEXICO - Report 14 Jul 2025 by Mauricio González and Francisco González

Some public finance results for May showed positive figures, but not many are expected to endure. The fiscal deficit was lowered a real -47% yoy thanks to an increase in budgetary revenues, especially robust VAT and income tax collections. However, depressed excise tax collections and oil-related revenues could jeopardize the total budget income target. Moreover, there is no sign Pemex will cease to be the dead weight it has become.

Total spending was more than 5% lower in the first five months of the year, but the adjustments to programmable spending needed to achieve this year's deficit target appear unattainable because there is little room for maneuver and there is a risk that budgetary revenues will slow in a period of economic contraction. Moreover, physical investment, which historically has been the variable used to reduce spending, has contracted to an extent that such cuts represent one of the biggest obstacles to any resumption of economic growth and therefore seem to have reached their limit.

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