Indebtedness has doubled this six-year term; the one in 2023 will be historic

One of the main criticisms that the Federal Income Law (LIF) 2023 has had, during its passage through the Congress of the Union, is the high debt ceiling that is requested for the following year, which is a historical amount. .

According to next year’s LIF, the government of Andrés Manuel López Obrador requested an internal debt ceiling of 1 trillion 170,000 million pesos, which represents a growth of 31.1% compared to what was approved for this year.

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

Although the objective of this government is to keep the debt, in its broadest measure, stabilized at around 50%, President López Obrador’s speech has generated noise among legislators, mainly those from the opposition such as the PAN and the PRI. , who in the legislative debate expressed that what was requested in each LIF contradicts the promise of no more indebtedness.

So far in the current administration, the domestic debt request submitted to Congress has increased by 127 percent. In 2019, the first year of the López Obrador government, the request was for 514.5 billion pesos, a figure that gradually increased until it doubled.

External credit has moderated

This could contrast with previous administrations. For example, in the first five years of the government of Enrique Peña Nieto, the debt ceiling increased 19.3%, while in the same period of Felipe Calderón it did so by 56.2 percent.

In contrast, the request for debt that can be contracted abroad has shown a fairly modest increase compared to domestic borrowing.

The LIF exposes a request for a debt ceiling of 5.5 billion dollars, which barely represents an increase of 100 million dollars compared to the first year of the López Obrador government, when 5.4 billion dollars were requested.

The strategy proposed by the Federal Government has shown a clear preference for internal indebtedness, at least in the last 10 years”, highlighted the Center for Public Finance Studies (CEFP) of the Chamber of Deputies.

In this sense, Héctor Villarreal, professor at Tec de Monterrey, explained that this strategy is used to prevent the contracted debt from being affected by any variation in episodes of volatility of the peso against other foreign currencies.

Although compared to the beginning of the six-year term, the request for foreign debt has increased little, compared to last year it shows an increase of 44.7 percent.

In this sense, the CEFP highlighted that 90.7% of the indebtedness will be of internal origin, for which the Federal Government maintains a low-risk and balanced debt portfolio.

“Despite the fact that there is a greater increase in real terms in the contracting of external debt than the internal one, most of the Federal Government’s indebtedness is expected to be contracted in the local market. The external indebtedness will only be used in a complementary way”, he added in his analysis.

Not enough money

Héctor Villarreal explained that not all debt is bad and, in the first instance, the debt ceiling requested for the following year should not be of concern; however, he can give indications that the income obtained, mainly from taxes and/or oil, is increasingly insufficient to cover spending needs.

The debt ceiling requested for this year represents 14% of the total income that is expected to be obtained in 2023, which adds up to almost 8.3 billion pesos.

In this sense, Villarreal pointed out that a fiscal reform is necessary that manages to increase tax collection, at the time that he regretted that in this six-year term it was not carried out, for which he hopes that one will be promoted for the next administration.

ana.martinez@eleconomista.mx