Macro Analysis /
Global

Mexico: Public Finances – $54.5 billion deficit in the PSBR up to April

  • Year-to-date, the PSBRs accumulated a $54.5bn deficit (~US$2.7bn), with a 182.8bn primary surplus

  • Expenditures rose 0.2% y/y in real terms. Revenues grew 5.9%, with +17.7% in income taxes, while excise taxes fell 45.8%

  • The HBPSBR stood at $13.1tn (~US$641.2bn), with domestic debt representing 67.0% of the total outstanding

Francisco Jose Flores Serrano
Francisco Jose Flores Serrano

Senior Economist, Mexico

Banorte
31 May 2022
Published by
  • Yesterday, the Ministry of Finance (MoF) released its public finance report for April 

  • Public sector borrowing requirements (Jan-Apr): $54.5bn deficit (~US$2.7bn) 

  • Public balance (Jan-Apr): $13.0bn deficit (~US$637.0mn) 

  • Primary balance (Jan-Apr): $182.8bn deficit (~US$8.9bn) 

  • Budget revenues rose 5.9% y/y in real terms, with increases both in oil (+42.7%) and non-oil revenues (+0.1%). In the latter, we highlight the 17.7% expansion in income tax, with excise taxes fell at -45.8% 

  • Expenditures were up 0.2% y/y in real terms, with declines in administrative (-1.5%) and autonomous branches (-7.2%), also noting a decline in CFE (-18.9%) 

  • In April, revenues increased 19.0% y/y with rises in practically all components. Spending was lower by 2.1%, with a contraction in autonomous and general branches 

  • The Historic Balance of Public Sector Borrowing Requirements (HBPSBR) stood at $13.1 trillion (~US$641.2bn), with 67.0% corresponding to domestic debt

PSBRs deficit of $54.5 billion up to April. The MoF released its public finance report for April, in which we highlight the $54.5 billion deficit in Public Sector Borrowing Requirements (PSBR) –the broadest measure of the public balance[1]–. This compares to the $225.7 billion deficit seen in the same period of 2021. The ‘traditional’ public balance posted a $13.0 billion deficit, lower than anticipated given more modest expenditures and higher revenues. Finally, the primary balance had a $182.8 billion surplus (expected: -$33.6 billion).

Total revenues increased 5.9% y/y in real terms. Revenues reached $2,274.4 billion in the period, $114.9 billion above budget. Oil-related income came in at $416.1 billion, +42.7% in real terms, mainly driven by higher oil prices. Meanwhile, tax revenues amounted to $1,456.0 billion, higher than projections by $39.8 billion. Inside, performance was mostly positive, highlighting income tax (17.7%), with the main decline in excise taxes (-45.8%), which has been impacted by the application of fuel stimulus. Meanwhile, VAT revenues declined 3.8%. Income from government-controlled entities (IMSS and ISSSTE) came in at $168.6 billion (+6.5%), while those of CFE reached $122.7 billion (-0.5%). Finally, non-tax revenues declined 38.8%, amounting to $110.8 billion.

[1] The PSBRs include the sum of the Public Balance, the financial requirements of the Mexican Bank Savings Protection Institute, financial requirements of deferred investment projects, adjustments to budget records, financial requirements of the National Infrastructure Funds, program of debtors and the expected gain or loss of development banks and development funds.

Budget spending rises 0.2% y/y. Total spending reached $2,294.1 billion, $100.6 billion lower than budgeted. In this context, primary spending rose to $2,105.1 billion, implying +0.2% y/y, with financial costs at $189.0 billion (-0.2%). Within the former, the programmable component grew 2.6%, amounting to $1,684.0 billion. Outlays from government-controlled entities (IMSS and ISSSTE) increased 5.8%, mainly driven by IMSS (8.4%). In addition, spending by CFE and Pemex fell 18.9% and 11.7%, respectively. We highlight the -1.5% in administrative branches, with strong declines in the Ministry of Economy  (-64.9%) and the Agrarian and Urban Development Agency (-48.7%), albeit with increases in Tourism (207.0%) and Welfare (44.8%). Moreover, autonomous branches spending fell 7.2%. Inside, the decline is mostly explained by INE (-32.3%) and the Federal Institute of Telecommunications (-10.1%), although higher in the General Attorney’s Office (13.2%) and in the Human Rights Commission (11.3%). Lastly, non-programmable spending rose 13.0% to $421.2 billion, with participations –transfers to states under the federal tax collection agreement– up 13.2%.

Increases in revenues but with a decline in spending in April. In the month, total revenues grew 19.0% y/y in real terms. Inside, oil-related resulted at +76.3%, as a result of high prices. Tax revenues came in at +14.2%. Specifically, income tax collection and VAT climbed 35.3% and 14.8%, respectively, albeit with excise taxes down 68.3%. Expenditures declined 2.1%. Programmable spending was lower by 3.8%, with administrative branches at -6.7% and generals at -7.4%. Within non-programmable spending, participations rose 11.4%.

The Historic Balance of Public Sector Borrowing Requirements (HBPSBR) stood at $13.1 trillion (~US$641.2 billion). Out of these, $8.8 trillion are domestic debt (67.0% of the total outstanding), with the external component at US$211.3 billion ($4.3 trillion; 33.3% of the total). Net public-sector debt amounted to $13.1 trillion. Inside, net domestic debt reached $8.7 trillion, while net foreign debt totaled US$215.1 billion (equivalent to $4.4 trillion).

[1] The PSBRs include the sum of the Public Balance, the financial requirements of the Mexican Bank Savings Protection Institute, financial requirements of deferred investment projects, adjustments to budget records, financial requirements of the National Infrastructure Funds, program of debtors and the expected gain or loss of development banks and development funds.