Net spending grew 18.8% annually in the first quarter of 2024: Treasury

Mexico City. The net spending of the federation amounted to 2 trillion 319 thousand 591 million pesos during the first quarter of 2023, which implied a real annual growth (discounting inflation) of 18.8 percent compared to one trillion 867 thousand 416 million pesos reported in the same period of 2023, reported the Ministry of Finance and Public Credit (SHCP).

According to its “Reports on the economic situation, public finances and public debt for the first quarter of 2024”, despite the increase, spending shows an underyear of 122 billion dollars, given that a disbursement of 2 trillion was scheduled. 441 thousand 611 million pesos during the first three years of this year.

When presenting the report, Gabriel Yorio González, Undersecretary of Finance and Public Credit, emphasized that the economy reflects not only economic strength, but the measures that have been taken to ensure an orderly transition by the next administration. “Mexico’s economic growth continues to show signs of strength, defying expectations of a possible global slowdown.”

According to the report, spending aimed at providing public goods and services to the population increased 24.9 percent in real terms annually; while social development increased 22.8 percent, being the highest increase for a first quarter since records have been recorded. Internally, the areas of education and social protection showed growth of 31.9 and 26.7 percent, respectively, reaching historical highs.

In the case of spending on social protection, the Treasury said, its performance also reflected the effect of the advance payment of social programs and other similar benefits.

Infrastructure spending increased 23.3 percent real annually in the first quarter of the year; the highest growth since 2014. This performance, the agency said, was linked to progress in various infrastructure projects that will be completed this year, which will continue to promote inclusive development, particularly in the southeastern region of the country.

Income grows

Budgetary revenues increased 2.4 percent in real terms annually as of March, reaching one trillion 871,294 million pesos, driven by an increase in tax collection of 3.4 percent, which, according to the Treasury, reflected the dynamism of the domestic market. .

Within collection, VAT registered a real annual increase of 4.1 percent compared to the first quarter of 2023, reaching 301,850 million pesos; For its part, the IEPS increased 66.4 percent in real terms, reaching 176 billion.

Meanwhile, income from Income Tax fell 5.2 percent to 726 billion pesos; while oil tankers fell in the same proportion, registering 288,698 million pesos, this in an environment of lower natural gas prices compared to the program, as well as an appreciation of the peso.

Debt exceeds 15 trillion pesos

According to the Treasury report, at the end of last March the Historical Balance of the Financial Requirements of the Public Sector (SHRFSP), the broadest measure of debt, went from 13.98 billion to 15.4 billion pesos in the last year.

The net debt of the federal government stood at 13 trillion 375 thousand 500 million pesos. 84 percent remained in the domestic market, of which 77.1 percent was contracted at a fixed rate and with long-term maturities.

Meanwhile, the financial cost was lower than programmed by 13 percent and lower than observed in the same period of 2023 by 3.9 percent in real annual terms.

In this regard, Yorio González highlighted that there is no evidence of imbalances either in macroeconomics or in public finances and even the perception of international investors is that Mexico is a country with a low level of debt with respect to its gross domestic product.

“It is a positive perception of investors, which is reflected in issues such as a low level of country risk, a high demand for Mexican assets in international markets and, importantly, in Foreign Direct Investment. In addition, the banks are solid, well capitalized, there are no high rates of high past due loans, we have access to all the most liquid markets. There are no elements to say that there could be financial stress in 2025,” he concluded.