Economics: Public finances got off to a dismal start as the 2025 Pre-Criteria are a cause of alarm
The week before last, the Ministry of Finance released its reports on both public finances for January-February 2024 and Economic Policy Pre-Criteria for 2025 (PCGPE). The public finance report shows a deterioration that the economic package approved for 2024 had anticipated, but it has unfolded in an accelerated manner. In a sign of this deterioration, the public deficit swelled to 399.7 billion pesos compared to 105.3 billion pesos a year earlier, an increase of 262.6% in real terms.
With respect to the information published in the 2025 Pre-Criteria, the main indicators in the macroeconomic framework project caution. However, this is not the case for the public finance assumptions. These present an overly optimistic and unrealistic outlook, in which a drastic reduction of the budget deficit is proposed that is supposed to take the form of a monumental 833.7 billion peso adjustment to public spending.
Despite that planned reduction, by 2025 all the current government’s "priority programs" are supposed to register increases in their budgets. This leads to the assumption that the entire adjustment in spending will take place in the areas of public investment, personal services (wages and salaries) and general services (acquisitions, maintenance, etc.), something that is simply unfeasible.
In this week’s Outlook, we analyze the recent evolution of public finances and the main assumptions spelled out in the 2025 Pre-Criteria.
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