Debt restructuring will help alleviate pressures for the next government: AMLO

We are looking for the next government not to have the pressure that we had at the beginning,” declared Andrés Manuel López Obrador, president of Mexico, during his morning conference at the National Palace, referring to the external debt restructuring that has been carried out during the current administration. .

The president pointed out that the restructuring of the debt that is contracted in foreign currency has helped to reduce the financial commitments that the incoming administration will have, contrary to what happened with his government when he came to power.

“I am no longer thinking only about how to end (the six-year term), which I am sure we will end very well, but how to leave the next government slack, not how (Carlos) Salinas left (Ernesto) Zedillo, with the economy on pins”, assured the Federal Executive.

Debt restructurings are a strategy that, since past administrations, have been used to alleviate financial pressures regarding debt services. With the arrival of the Covid-19 pandemic and the drop in interest rates, the Ministry of Finance and Public Credit (SHCP) carried out various operations to take advantage of and improve debt maturities.

In this sense, López Obrador indicated that regarding the external debt, in 2025 – which would be the first year of the next government – ​​half of the debt interest of what his current administration paid will be paid.

“It is no longer just next year, nor 2024. May 2025 not have financial pressures. We are acting very responsibly in that sense… financially, we already have it resolved,” added the Federal Executive.

External debt represents 31%

According to data from the Ministry of Finance, as of October, the debt contracted in foreign currency represents 31% of the total credits that Mexico has.

At said cut, the Historical Balance of the Financial Requirements of the Public Sector (SHRFSP) – the debt in its broadest measure – added 13 trillion 497,562 million pesos.

Of this amount, 69% is internal debt, for an amount of just over 9.3 trillion pesos. Meanwhile, the external debt is for 4.1 trillion pesos.

“Regarding the foreign market, there has been no need to resort to placement operations of Federal Government debt instruments in international financial markets. The foregoing, in accordance with the commitment to maintain a solid debt profile and use external debt strategically and as a complementary source of financing, whenever favorable conditions of cost, amount and term are reached”, highlighted the SHCP in its latest report on Public Finance and Public Debt.

Regarding the financial cost of the debt, between January and October of this year the government disbursed 600,161 million pesos, an increase of 11.3% compared to the same period last year. The increase was largely due to the effect of inflation.

ana.martinez@eleconomista.mx