Economics: Public spending priorities for 2020 remain the same as before
As the first full-year budget following the extraordinarily sophomoric exercise of 2019, the 2020 budget and the net public spending as of June offer a much clearer view of the ways in which this government intends to target and implement its resources. The newly released public finance results for the first half of the year also afford an initial snapshot of how the government’s approach was playing out even as the country began to plunge into profound economic and health crises.
The learning-curve problems of any new administration continue to be aggravated by issues of outright incompetence at numerous ministries and agencies, as well as by this government’s obsession with what it terms “republican austerity” in the form of unprecedentedly deep spending and payroll cuts that have greatly undercut the efficacy of diverse programs and institutional management. Moreover, officials have reoriented spending into public assistance programs and investment projects of doubtful economic and social profitability.
The most notable increases in programmable spending by function or area of purpose were observed in social development, a category that includes spending on welfare programs, direct cash transfers, education and social protection. In contrast, the presidency has refused to allot sufficient funds to deal with the pandemic, including protective equipment (PPE) and Covid-19 testing, as well as to the public health system in general; spending on health in the midst of the current pandemic was lowered a real 1.7%. Nor has the government redirected its attention toward providing support to companies and workers struggling to cope with the crisis in incomes and jobs, a failure that will make any eventual economic recovery all the more complicated.
Also troubling for Mexico’s future is a growing dependence on debt and non-recurring funding sources. Meanwhile, we have witnessed a doubling of financing based on new public debt even as petroleum revenues as a percentage of total spending were more than halved.
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