The Center for Economic Studies of the Private Sector (CEESP) has issued a warning about signs of unsustainability in Mexico's public finances. Despite favorable results reported in May 2023, there are ongoing future risks that raise concerns about medium-term financial sustainability.
One of the main challenges pointed out by the CEESP is the country's weak revenue collection. Tax collection has not been sufficient to cover the government's financial needs, creating a gap in revenues. Additionally, strong pressures on public spending are observed, especially during the electoral season when spending demands intensify. This poses a concerning scenario in terms of sustainability and fiscal balance.
In the first five months of the year, public finances have shown relative stability, but it is important to consider future risks. Public debt has increased significantly in the past 12 months, raising concerns about the government's ability to manage its debt burden. The growth in subsidies, transfers, contributions, as well as physical investment and the financial cost of debt, reflects an acceleration in the implementation of social programs and flagship government investment projects. However, it also raises questions about the long-term sustainability of these expenses.
To address these challenges and ensure financial sustainability, it is necessary to strengthen tax collection. This involves promoting greater efficiency in tax administration, combating tax evasion, and seeking greater taxpayer participation. Likewise, a prudent approach to public spending is required, prioritizing strategic investments and finding ways to optimize resource allocation. It is crucial for the government to take concrete measures to address the signs of unsustainability in public finances, with the aim of ensuring financial stability and sustainable economic growth in Mexico.