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Mexican finance ministry to unveil 2021 budget

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Mexican finance ministry to unveil 2021 budget

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Photo: Carlos Jasso/ Reuters

Mexican Finance Minister Arturo Herrera Gutierrez will today present the first draft of the 2021 national budget proposal amid mounting concerns over a COVID-19-induced recession.

Ahead of today, President Andres Manuel Lopez Obrador (AMLO) has signalled his government’s intention to maintain severe economic austerity measures. As Mexico experiences a steep decline in private investment and a drop in oil and tax revenue, the new budget seeks to secure funding for prioritised public infrastructure projects while maintaining current levels of spending on health and social security programs.

The 2021 national budget is expected to focus on boosting revenue sources for the federal government. Mexican authorities intend to reform the state oil company PEMEX, which will likely cut its production goals for 2021. With oil prices at a record low since 1979, the AMLO administration plans to renew trade partnerships within the North American market and build on Mexico’s increasingly important position as a major manufacturing hub to boost economic recovery.

As AMLO refused to increase debt issuance and vows not to raise taxes, expect Mexico’s federal government to pursue a very delicate balancing act in its budget proposal, weighing the realities of economic contraction and dwindling resource generation with commitments to fiscal discipline.

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