Ramírez de la O, against the current

With the presentation of the 2023 economic package made by the Secretary of the Treasury and Public Credit, Rogelio Ramírez de la O, he stands against what most, if not all, private analysts estimate regarding the economic projections of Mexico.

The head of public finances assures that it is a realistic and balanced package. For their part, the economic analysis teams of practically all financial institutions and business and non-governmental organizations describe it as excessively optimistic.

It must be remembered that this is, in fact, the first economic package that the third acting Secretary of the Treasury of the López Obrador government presents with his personal stamp.

It is worrying, because the previous package originally projected economic growth of 4.1%, which was later cut to 3.2 and finally reduced to 2.4% by the end of this year 2022.

Although the 2022 package was carried out by Arturo Herrera and Ramírez de la O., it also counts as a precedent for the wishful thinking of the current head of public finances.

The sovereign analyst of the rating agency Moody’s for Mexico, Renzo Merino warned yesterday that the fiscal inheritance that the current government will leave to the next administration will be complicated.

Not only that. He pointed out that given the uncertain world context and the impact of inflation on the interest rate and interest on the debt, they are risk factors for the sovereign note that is currently two levels above investment grade: Baa2 with a stable outlook.

In the rating agency’s diagnosis, the downward risk of the López Obrador government increased because it exhausted the fiscal buffers it inherited from the previous government.

Concerns among non-government analysts are around the projection of economic growth of 3% (in a range of 1.2 to 3.0%); inflation of 4.7; income of 7.1 billion pesos; and expenditure of 8.2 billion pesos.

The data that has the greatest credibility is that of the debt in relation to the GDP of 49%, although the high financial cost is worrying, that is, the growing payment that its service represents.

But what are the arguments of the Treasury? They have come out to explain, mostly the undersecretary Gabriel Yorio.

He has said that the economic package is not only based on economic growth, but on a series of variables that even move in opposite directions.

For the preparation of the package -he explains-, general equilibrium models are used, and this generates a nominal base, which is anchored in all the scenarios that have been “run” in order to estimate the macroeconomic framework of the program, of the 2023 economic package.

What happens if the projected growth does not occur? –Yorio answers–: there will be small variations in the nominal base with which the budget was formulated, but not strong deviations.

And this will allow us to have a certain cushion to finalize the 2023 economic program in the budget lines that are being proposed to Congress.

The official defends the figures raised for income, expenses and debt, as well as his inflationary expectations and in general the economic package.

From what the Treasury representatives say, all the economic analysts who describe the package as optimistic are wrong.

For Yorio, the economic growth floor for Mexico is 2% and upwards from there.

The truth is that in the past we have seen that government projections are made that in the end are not fulfilled.

In the official perspective, no recession is expected in the United States or Mexico.

On the other hand, they see enormous potential due to the increase in public investment and nearshoring.

Hopefully this time they are not wrong. For now, disbelief is widespread. At the time

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