Mexico Slashes Fiscal Deficit by 71% in First Quarter as Tax Revenue Surges

The Mexican government has cut its fiscal deficit by 71% in the first quarter of 2025 compared to the same period last year, the Ministry of Finance and Public Credit reported.

This dramatic reduction aligns with President Claudia Sheinbaum’s goal of fiscal consolidation after record deficits. Public Sector Financial Requirements totaled 159,200 million pesos ($8.12 billion) during January-March, down from significantly higher levels in 2024.

The budget deficit reached 121,000 million pesos ($6.17 billion) by March end, well below the programmed 235,000 million pesos target. The government achieved a primary surplus of 182,000 million pesos ($9.28 billion), exceeding forecasts by 79,000 million pesos.

The fiscal improvement follows Mexico’s record 5.7% deficit in 2024. The Sheinbaum administration aims to reduce this figure to approximately 3.9% by year-end through continued spending discipline and revenue enhancement.

Tax collection grew by an impressive 17.8% year-over-year, reaching 1.522 trillion pesos ($77.63 billion). This exceeded programmed collections by 37,075 million pesos.

In addition, income tax revenues jumped 21.3% to 901,261 million pesos ($45.96 billion). Value Added Tax collection increased 20.9% to 400,444 million pesos ($20.42 billion).

Import taxes showed remarkable growth of 50.5%, generating 42,347 million pesos ($2.16 billion). This surge stems from a favorable exchange rate, tighter e-commerce oversight, and strengthened customs enforcement.

Mexico’s Fiscal Performance Amidst Declining Oil Revenues

The robust tax performance helped offset declining petroleum revenues, which fell 13.8% to 227,519 million pesos ($11.6 billion). Oil-related income missed targets by 100,325 million pesos, continuing a long-term trend of diminishing importance in Mexican public finances.

Public spending decreased by 5.9% compared to Q1 2024, totaling 2.27 trillion pesos ($115.75 billion). The government underspent its approved budget by 178,150 million pesos ($9.09 billion).

Programmable spending fell 9.7% year-over-year to 1.57 trillion pesos ($80.07 billion). These fiscal improvements occur amid modest economic growth. The Mexican economy expanded by just 0.2% quarterly and 0.8% annually in Q1 2025.

The Finance Ministry projects annual growth between 1.5% and 2.3% for 2025, more optimistic than the central bank’s 0.6% forecast. Challenges remain for the administration.

Continued oil revenue declines and uncertainty around U.S. trade policy create headwinds. Additionally, sustaining tax collection growth without comprehensive fiscal reform may prove difficult as the year progresses.

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