IMF: amendment to the justice system creates uncertainty

Washington. The reform of the Judicial Branch in Mexico generates uncertaintystated the International Monetary Fund (IMF) in its annual review of the Mexican economy.

The reform creates a new source of uncertainty that can affect private investment decisionsso that It is essential what is put into practice in a clear and predictable manner, guaranteeing the independence and professionalism of the Judiciary and strengthening the rule of lawIMF experts warned, referring to the reform approved in September, which made Mexico the only country in the world to elect all its judges by popular vote.

In the periodic evaluation it carries out to its member countries, known as Article IV, the IMF reduced its economic growth forecast for Mexico to 1.5 percent this year and stated that a comprehensive fiscal reform is required.

The IMF said growth in Latin America’s second-largest economy will slow next year, when inflation will also approach the central bank’s target of 3 percent.

Continued monetary tightening and a slowdown in activity are expected to reduce inflation to the 3 percent target in 2025, but risks of the pace of price rises increasing remain on the rise.

They warned that weaker-than-expected economic growth in the United States, rising global risk aversion and unforeseen effects of recent reforms could weigh on Mexico’s output.

The experts recommended that the government of President Claudia Sheinbaum carry out a comprehensive tax reformfocus public spending and reduce inequalities in the pension system.

A medium-term fiscal strategy is needed to reduce the deficit and debt.

They highlighted that public spending on pensions has increased 0.6 percent of gross domestic product (GDP) in the last three years. Furthermore, they consider it a priority to address the imbalances between the federal budget and Pemex and improve corporate governance of the latter.

There is a risk that additional support for Pemex and/or higher-than-expected spending on infrastructure projects could lead to a modest fiscal overflow at the end of the yearthey warned, while reporting that government support for Pemex has cost one percent of GDP in 2024.