September 8 marks the deadline for the Executive to present to the Congress of the Union the General Criteria of Economic Policy 2024, the Initiative for the Law of Income, and the project of the Federal Expenditure Budget. This economic package faces the task of addressing considerable economic risks, both current and those that could intensify during the electoral period and at the beginning of the next administration.
One of the main challenges lies in maintaining economic stability in the face of risks. The unsustainability of public finances stands out, a consequence of insufficient fiscal resources to support significant and rigid expenditure commitments, especially from 2025 onwards. The Center of Economic Studies of the Private Sector (CEESP) warns that financial fragility could intensify towards the end of the current administration and the start of the next if urgent measures are not taken.
The deterioration of public finances is evident in the increase in expenditure and fiscal deficit relative to GDP. Between 2018 and 2022, public spending grew by 2.7% of GDP, while revenues increased by only 1.5% in the same period. Additionally, the fiscal deficit raised from 2.1% of GDP in 2018 to 3.3% in 2022 and is estimated to be 3.7% for this year. Treasury preventive reserves, including stabilization funds, have decreased, increasing vulnerability to unforeseen events.
The CEESP underscores the weakness in public revenues and projections of future insufficiency. Revenues in the first half of 2023 fell short of the plan, and the expected economic slowdown for 2024 could further decrease fiscal resources. Additionally, recoveries of corporate income tax (ISR) from large companies may not be sustained over time, generating uncertainty.
Structural pressures include the growth of pension and retirement expenses, and the increase in public debt. The negative perception of state-owned enterprises like Pemex also affects financial stability. The use of Treasury preventive reserves. Faced with these concerns, the CEESP emphasizes the importance of addressing public spending with political caution, avoiding commitments that threaten fiscal soundness, and prioritizing critical areas such as the healthcare system and public investment. The 2024 economic package must be strategically designed to mitigate risks and maintain fiscal stability, concludes the organization.