Mexico’s Public Debt Hits Record High, Surpasses 17.5 Trillion Pesos
Federal public sector debt in Mexico reached a new all-time high at the end of April 2024, standing at 17.5 trillion pesos, according to the latest report from the Ministry of Finance and Public Credit (SHCP). This figure represents an increase of 2.1 trillion pesos compared to the same period last year, which reflects a year-over-year real growth of 9.7%.
The historical balance of the public sector’s financial requirements—considered the broadest measure for analyzing the country’s debt—has grown despite austerity measures and spending cuts implemented by the previous administration and continued by the current president, Claudia Sheinbaum. Despite these efforts focused on containing the fiscal deficit, the SHCP has raised its debt projection as a percentage of Gross Domestic Product (GDP), from 51.4% to 52.3% by the end of 2025.
Between October 2023 (when the new administration took office) and April 2024, indebtedness increased by nearly 724 billion pesos. This amount is virtually equivalent to what’s needed to cover the federal budgets of key sectors such as Education, Health, Energy, and Public Security for 2025, according to data from the Federal Expenditure Budget.
The rise in debt is mainly due to an increase in the financial cost of servicing it, which grew by 9.1% in real terms to nearly 390 billion pesos. Additionally, domestic debt posted a significant increase of 1.5 trillion pesos compared to April of last year, while external debt grew by just over $13.5 billion USD. The total debt balance now amounts to 1.8 times the projected annual public expenditure for the end of 2025, which stands at 9.3 trillion pesos.
The composition of the public debt remains largely domestic, accounting for 74% of the total, while the remainder is owed in external markets. With the level reported as of April, 94.3% of what was programmed by the finance authority for the entire year has already been reached, suggesting there will be additional pressure on public finances for the rest of 2024.
This situation coincides with an international environment marked by high interest rates and persistent inflationary pressures, both of which have made financing more expensive for emerging economies like Mexico’s. The country’s fiscal policy faces the challenge of balancing debt with the need to meet social demands, invest in strategic infrastructure, and maintain market confidence.
In summary, the sharp rise in Mexico’s public debt highlights the challenges the new administration faces in maintaining financial and fiscal stability. While the debt is still considered manageable relative to the size of the economy, the upward trend and the rising cost of servicing it underscore the importance of prudent fiscal policies and strategies for sustained economic growth to ensure the viability of public finances in the medium and long term.
