The Mexican government has put forth a budget proposal for 2024 that includes a larger budget deficit in order to boost social spending and complete infrastructure projects during the final year of President Andrés Manuel López Obrador’s administration.
The proposal, submitted to the congress on Friday, projects economic growth of between 2.5% and 3.5% next year, which is in line with the government’s current estimate for this year. The Finance Ministry states that the solid domestic market and investments in infrastructure will continue to fuel the national economy, with Mexico also aiming to attract further global investment to benefit production, employment, and exports.
Under the plan, around $512 billion will be allocated for spending, equivalent to 26.2% of the country’s GDP. This represents a 7.8% increase in peso terms compared to 2023. Budget revenue is also expected to rise by 0.8%, as increased tax collections offset the decrease in oil income.
The budget deficit is projected to expand to 5.4% of gross domestic product in 2024, up from an estimated 3.9% this year. Furthermore, public debt as a percentage of GDP is expected to rise to 48.8% from 46.5%. The plan anticipates a primary deficit (excluding debt payments) equivalent to 1.2% of GDP, compared to a surplus of 0.1% of GDP this year.
Notably, the proposed spending plan includes provisions for the completion of key projects in López Obrador’s last year in office. This includes the Tren Maya tourist train in the southeast of the country, as well as additional financial support for state oil company Petróleos Mexicanos.
The budget plan will now be debated in congress and potential changes may be made before it is approved by mid-November. Key assumptions for the proposal include an estimated inflation rate of 3.8% and an average exchange rate of 17.10 pesos to the U.S. dollar.
In terms of the energy sector, national oil production is expected to see a slight increase to 1.98 million barrels per day, with Mexican crude projected to have an average price of $56.70 per barrel, compared to an estimated $67 per barrel this year. Additionally, crude oil exports are forecasted to average 994,000 barrels per day, slightly lower than the figure for this year.
