Finance Ministry Nearly Hits Its 2025 Deficit Target and Bets on Higher Revenue and Spending Restraint in 2026
Mexico’s Ministry of Finance and Public Credit (SHCP) closed 2025 with Public Sector Borrowing Requirements (RFSP) at 4.4% of GDP, just 0.1 percentage points above the updated 4.3% target set out in the 2026 General Economic Policy Guidelines. In nominal terms, the broad deficit came in at 1.55 trillion pesos versus a 1.52 trillion-peso goal— a narrow gap the government attributes to “more cautious” spending management and a calibrated fiscal adjustment aimed at avoiding an abrupt slowdown in activity.
Finance Minister Édgar Amador Zamora argued the outcome was achieved by moderating outlays and staying on the consolidation path in a year marked by weaker economic momentum and a more uncertain external backdrop. In particular, the shift in the political landscape in the United States and more volatile trade signals contributed to the target revision: the original goal in the 2025 Economic Package was 3.9% of GDP, but it was adjusted after acknowledging slower growth and greater caution in investment and consumption.
The figure also needs to be read against 2024: SHCP emphasized that the 2025 deficit implied a reduction of about 1.3 percentage points of GDP from the prior year’s closing level—one of the most visible adjustments in decades, considering that the RFSP capture not only the budget balance but also other public-sector financing needs. This metric is key for markets because it signals the pace of debt issuance and, by extension, potential pressures on interest rates, debt-service costs, and refinancing needs.
The 2026 strategy aims to bring the RFSP down to 4.1% of GDP. The plan, according to SHCP, will focus on strengthening revenues through tax-collection efficiency measures—consistent with what is laid out in the Revenue Law—while keeping spending “austere,” with social priorities and investment protected. In practice, the challenge is twofold: first, raising collections without broad-based tax hikes; second, containing the growth of current spending and debt-service costs in an environment where rates remain a meaningful factor for servicing debt and where Mexico’s economy has posted moderate growth following the post-pandemic normalization phase.
Analysts often note that a 0.1 percentage-point-of-GDP overrun looks manageable, but not trivial: in a scenario where growth falls short of expectations or external shocks hit—such as an industrial slowdown in North America or bouts of financial volatility—tax and oil revenues could come in below plan. In that case, authorities face choices around spending reallocations, underspending, or additional adjustments. Working in the government’s favor is that gradual consolidation reduces the risk of a fiscal “squeeze” that would hurt jobs and consumption; working against it is that the window for stabilizing the debt-to-GDP ratio narrows if potential growth remains constrained.
In the background, the fiscal debate intersects with structural priorities: boosting public and private investment, improving productivity, and ensuring regulatory certainty to support nearshoring, while also funding social programs and strategic projects without weakening the fiscal balance. For investors, the key signal will be whether the path to 2026 is underpinned by recurring revenues and sustainable spending control rather than one-off measures, since that influences perceptions of sovereign risk, borrowing costs, and macro stability.
Overall, SHCP came very close to its 2025 deficit target after revising the goal in response to a more complex external environment, and it is now betting on greater tax-administration efficiency and spending discipline for 2026. The result reinforces the intent of gradual consolidation, while keeping on the table the challenge of balancing fiscal stability with growth in an economic cycle that still appears sensitive to external demand and investment confidence.
