Mexico Public Finances: Ministry Answers Economist Warning
MEXICO · ECONOMY
Key Facts
—What happened: Mexico’s finance ministry rebutted The Economist’s warning about fiscal credibility.
—How big it is: The Economist says Mexico’s 10-year dollar bonds yield about 6.4%, above Guatemala’s.
—What it means: Mexico’s investment-grade rating is safe unless a major shock hits, says The Economist.
—The catch: Fitch’s BBB- leaves Mexico one notch above junk, and S&P’s outlook is already negative.
—Who it hits: Investors in Mexican bonds face higher borrowing costs if credibility slips.
—What comes next: The 2027 budget package is due in Congress around September 8, 2026.
The Economist put Mexico public finances under fire, and the finance ministry has answered back. It called the magazine’s account out of date and said Mexico keeps its investment grade.
Ministry pushes back
The row over Mexico public finances broke into the open at the weekend.
Mexico’s finance ministry, known as SHCP, has contested The Economist’s warning about the country’s fiscal credibility. Officials defend the government’s strategy of gradual fiscal consolidation.
The ministry called The Economist’s piece ‘desactualizado’ – out of date – and said Mexico ‘conserva el grado de inversion’. Finance minister Edgar Amador Zamora has held the post since 8 March 2025.
What The Economist argued
The Economist published an article on September 3, 2026, saying Mexico is struggling to win over bond markets. It argues that the 2027 budget presentation will test investor confidence in Mexico’s economic policy.
The article says Mexico is likely to avoid losing its investment-grade rating. That is because of the size and diversification of its economy and its direct access to the U.S. market.
What the magazine argued
The Economist pointed to a deficit of 5.7 percent of GDP in 2024 and debt rising from 52 to 63 percent.
It said about three quarters of federal spending is locked in and hard to cut. It also modelled a scenario in which the USMCA trade pact collapses.
It noted a peso yield of 9.3 percent as the price investors ask to hold Mexican debt.
The bond market signal
The Economist points to higher borrowing costs for Mexico in foreign-currency debt. Yields on 10-year dollar bonds have reached about 6.4%.
That level is above some speculative-grade issuers, such as Guatemala. It signals that investors demand a higher premium to hold Mexican debt.
The 2027 budget deficit target
Mexico’s government targets a deficit of 3.5% of GDP for 2027. That is down from 4.1% in 2026 and 4.3% in 2025.
But banks like Banamex and rating agency Fitch question whether the government can achieve that. They project deficits closer to 4.4% of GDP in 2026 and 2027.
Debt ratio projections
Preliminary guidelines from the finance ministry project the overall debt ratio at about 55% of GDP in 2027. That is up from roughly 52.3% in an earlier estimate.
Fitch uses the broad public-sector borrowing requirement, the SHRFSP. It puts that at 54.0 percent of GDP for 2026 and 54.8 percent for 2027.
Pemex’s heavy burden
Pemex, the state oil company, is a central concern for rating agencies. The government has provided significant financial support to Pemex.
Moody’s says the federal government gave Pemex about US$35 billion in 2025, roughly 1.9% of GDP. It budgeted an additional US$14 billion, about 0.7% of GDP, for 2026.
Fitch’s Shelly Shetty has said support for Pemex ‘subtracts a full notch’ from Mexico’s rating.
Moody’s downgrade
Moody’s downgraded Mexico’s sovereign rating from Baa2 to Baa3 in May 2026. The agency cited fiscal weakness, a rigid spending structure, a narrow tax base, and continuing support for Pemex.
Baa3 is investment grade, but it is the lowest rung on Moody’s scale. The outlook is stable.
Fitch and S&P ratings
Fitch affirmed Mexico at BBB- with a stable outlook on 30 July 2026. That is the lowest investment-grade rung, one notch above speculative.
S&P Global Ratings has Mexico at BBB in foreign currency and BBB+ in local currency. It revised the outlook to negative on 12 May 2026.
What investment grade means
Investment grade is a rating that signals a country is likely to repay its debts. It matters because it affects how much interest a government pays when it borrows.
A downgrade to speculative grade, often called junk, would make borrowing more expensive. It could also scare away some investors who are only allowed to hold investment-grade bonds.
Who is who in the dispute
The Economist is a London-based weekly magazine with strong influence among global investors. Its article on Mexico appeared on September 3, 2026.
Mexico’s finance ministry, SHCP, manages the federal budget and debt. Officials responded to criticism, but the signer’s name is unconfirmed.
What the ministry says
SHCP officials defend the government’s strategy of gradual fiscal consolidation. They call the 2027 budget package responsible.
They argue the plan will keep Mexico’s debt on a sustainable path. The ministry has not issued a formal, signed rebuttal specifically to The Economist, according to available sources.
Why the budget matters
The 2027 budget package is the government’s spending and revenue plan for next year. It must be approved by Congress, and the deadline for submission is around September 8, 2026.
Rating agencies watch this package closely because it signals the government’s fiscal discipline. A weak budget can lead to a downgrade, which raises borrowing costs.
What a downgrade would mean
Mexico is rated Baa3 by Moody’s, BBB- by Fitch and BBB by S&P, all investment grade. A cut to speculative grade, or junk, would make borrowing harder and costlier.
Many pension funds and foreign investors are only allowed to hold investment-grade bonds. Losing that status could force them to sell Mexican debt, causing yields to spike.
The role of Pemex
Pemex, the state oil company, is a major drain on public finances. The government has given it billions in support, which rating agencies see as a risk.
Moody’s says the government provided about US$35 billion in 2025 and budgeted US$14 billion for 2026. Pemex’s own debt stood at US$77.5 billion at the end of June 2026, down 9.1 percent.
What to watch next
The formal budget package will be presented to Congress in the coming days. Rating agencies will then review Mexico’s fiscal plans and may adjust their outlooks.
The Economist warns that credibility is on the line. The ministry insists the package is responsible, but markets will judge.
What happens next
The formal 2027 budget package is due in Congress around September 8, 2026. Rating agencies will review Mexico’s fiscal plans.
Frequently Asked Questions
What did The Economist say about Mexico?
The Economist said Mexico is struggling to win over bond markets. It argued that the 2027 budget will test investor confidence, but Mexico is likely to keep its investment-grade rating.
How did Mexico’s finance ministry respond?
The ministry called the piece out of date and said Mexico keeps its investment grade. It defended a strategy of gradual fiscal consolidation.
What is Mexico’s deficit target for 2027?
The government targets a deficit of 3.5% of GDP for 2027. Banks and Fitch project a higher deficit, around 4.4% of GDP.
What is Mexico’s current credit rating?
Moody’s rates Mexico Baa3 with a stable outlook. Fitch rates it BBB- stable and S&P BBB with a negative outlook.
Why does investment grade matter?
Investment grade signals a low risk of default, which lowers borrowing costs. Losing it would make debt more expensive and could reduce investor demand.
This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error
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