Financing needs will drop to 10.1% of GDP in 2023

The financing needs of the government of Andrés Manuel López Obrador will be less the following year, as a proportion of the Gross Domestic Product (GDP), in accordance with the Annual Financing Plan for 2023, prepared by the Ministry of Finance and Public Credit (SHCP). ).

The document indicated that, for the following year, the needs will be 3 trillion 179.500 million pesos, which represents 10.1% of GDP. The percentage is less than the 11.0% that is estimated to represent at the end of this year.

Financing needs are associated with the amount of resources that the federal government requires to cover its fiscal deficit, as well as the debt amortizations scheduled for a given year.

According to what was approved in the 2023 Economic Package, the federal government deficit is 1 trillion 168.300 million pesos, which represents 3.7% of GDP. Meanwhile, debt amortizations amount to 2 trillion 11.200 million pesos, 6.4% of GDP.

“By 2023, the composition of these maturities is 6.2% of GDP of internal amortizations, and 0.2% of external amortizations,” explained the agency.

Treasury, in charge of Rogelio Ramírez de la O, explained that the financing needs are consistent with the debt ceiling that was approved for this year, of 1 trillion 170,000 million pesos, which represents 3.0% of GDP, while for foreign debt was approved up to 5,500 million dollars.

The internal debt ceiling approved for 2023 represents a growth of 31.1% compared to what was approved for this 2022, in addition to being the highest debt ceiling requested.

The main objective of the debt policy will be to maintain the percentage of the debt with respect to the GDP stabilized around 50% and to maintain strict adherence to the debt ceilings authorized by the Honorable Congress of the Union”, explained the Ministry of Finance and Public Credit (SHCP) in the General Criteria of Economic Policy 2023.

Preference for the domestic market

The Annual Financing Plan for 2023 stipulated that the debt management strategy for the following year is based on covering financing needs, for which preference will be given to long-term internal debt and fixed rate.

In addition to meeting the needs, the government will continue to seek to improve the maturity profile of the debt, as well as its characteristics, in addition to carrying out a comprehensive management of portfolio risks, optimizing financial and risk management, promoting market participation of capital in instruments aligned with Environmental, Social and Governance (ASG) criteria, as well as continuing with the placement of bonds based on the Sustainable Bonds Reference Framework.

The Treasury explained that in order to achieve the objectives, in addition to prioritizing the domestic market, external credit will be used in a strategic and complementary manner, as long as the conditions in international markets are favorable and allow the opening of new markets for sovereign bonds in foreign currency. , in order to diversify the market and broaden the investor base, among other strategies.

“As part of the strategy for 2023, the execution of liability management operations (swaps and repurchases) is contemplated, as long as the prevailing market conditions are appropriate.”

Debt would close at 49.8% of GDP

In the 2023 Annual Financing Plan, the Ministry of Finance made an upward modification compared to the end of this year of the Historical Balance of the Financial Requirements of the Public Sector (SHRFSP) – the debt in its broadest measure – compared to the last projection disclosed in the Economic Package.

Now, the debt is expected to close at a level of 49.8% of GDP, lower than the 51% rate that was approved for this year, but higher than the estimate of the 2023 Economic Package of 48.9 percent. In this way, the debt in its broadest measure would close at 14.2 trillion pesos this 2022.

“The main component of the SHRFSP is the Federal Government’s debt, which represents 80% at the end of 2022, an amount that amounts to 9.4 trillion pesos for internal debt and 118.8 billion dollars for external debt,” said the Treasury.

By 2023, the Treasury estimates that the SHRFSP will be located at 49.4% of GDP.

ana.martinez@eleconomista.mx