Mexico’s Fiscal Consolidation: IMF Predicts Deficit Reduction by 2025

The International Monetary Fund (IMF) forecasts that Mexico will achieve a reduction in its public deficit to 3.5% of its Gross Domestic Product (GDP) by 2025.

This marks a significant decrease from the 5.9% of GDP expected at the end of this year. Experts from the IMF highlight that the incoming government’s fiscal consolidation strategy will gradually reduce the deficit.

By 2026, they anticipate it will reach 2.7% of GDP, maintaining this level through 2029. Under President Andrés Manuel López Obrador, Mexico’s fiscal deficit reached 5.9% of GDP, the highest in a decade.

Countries did not even see this level during the pandemic when many adopted expansive policies to boost their economies. These policies were recommended by the IMF.

In contrast, Mexico’s deficit was 4.3% of GDP in 2020, while the global average was 8.7%. The IMF report indicates that Mexico’s government debt will equal 57.7% of GDP this year, reflecting a rise of 4.6 percentage points from last year’s 53.1%.

The IMF projects this debt ratio will hover around 57% of GDP from 2025 to 2028 and increase to 58.1% by 2029.

Compared to other emerging markets, Mexico‘s debt situation appears more favorable. The average debt among its peers stands at approximately 70.8% of GDP.

This fiscal outlook suggests that Mexico is on a path to stabilizing its economy through careful management and strategic planning. The country aims for sustainable growth and fiscal responsibility in the coming years.