The 2025 expenditure budget, which will be discussed in November, must include a credible fiscal consolidation plan to meet medium-term goals and maintain sustainability in public finances, said the International Monetary Fund (IMF) in its Outlook report. Regional of the Western Hemisphere, released yesterday.
In a brief section on Mexico’s economic situation, the organization stated that after solid growth in 2023, the country’s activity has slowed in recent quarters.
The IMF mentioned that Latin America’s public finances withstood the impact of the pandemic better than expected, but public debt is still high and will continue to rise in the absence of additional fiscal consolidation.
Most countries have ambitious plans to strengthen finances and stabilize debt; They must implement them without further delays. Consolidation will support the normalization of monetary policy and further strengthen policy credibility and resilience
he explained.
He argued that while addressing spending inefficiencies could help strengthen public finances, especially in the short term, successful consolidation requires directing revenues toward growth and focusing on increasing investment.
Implementing fiscal consolidation will require greater institutional discipline and stability. The region’s fiscal rules and compliance history provide a basis for achieving this
he stated.
Regarding monetary policy, the IMF stated that an increase in the prices of services, raw materials and an escalation of global trade tensions represent risks that could increase inflation.
He commented that in Mexico measures could be taken to return to the Bank of Mexico’s inflation goal of 3 percent at the end of 2025, after which in the first half of October it was 4.69 percentage points.
Given the expectation that core inflation will continue to decline, particularly that of services, and that the factors that have raised non-core inflation will fade in the coming quarters, headline inflation is still expected to return to our target of 3 percent in the fourth quarter of 2025
noted the Bank of Mexico in its latest quarterly report.
Regarding the agenda to carry out structural reforms, the IMF indicated that it is scarce in Latin America and that improving governance is a key priority that covers all areas of growth. This includes strengthening the rule of law, combating corruption and crime, and improving government effectiveness.
.
He added that to boost investment it is necessary to improve the business environment and encourage competition, reduce the administrative burden and entry costs for companies.
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