The following year, the government of Andrés Manuel López Obrador will allocate 63.2% of total spending to pensions, the financial cost of debt and federalized spending, with which there is less and less fiscal space to make public policy, indicated the Center for Economic and Budget Research (CIEP).
Alejandra Macías, general director of the CIEP, asserted that without the implementation of a fiscal reform it is urgent to review the spending commitments that exist and that put pressure on public resources, which in turn means that the money that can be allocated to items such as education, health, or the implementation of a National Care System, are reduced.
“Federalized spending, pensions and the financial cost of the debt are prioritized, which together account for 63.2% of the budget; however, the fiscal space is reduced to 2% of the Gross Domestic Product (GDP)”, said José Luis Clavellina, Research Director of the CIEP.
In the case of pensions, the Federal Expenditure Budget Project (PPEF) for the following year proposes spending close to 1.7 billion pesos, considering both contributory pensions and those that are not, as is the case of the Welfare Pension for Older Adults.
For its part, the financial cost of the debt, an item that contemplates the payment of interest and other debt services, will increase to 1.07 trillion pesos the following year, as a consequence of the rise in the interest rates of the central banks to make against high levels of inflation.
Federalized spending, which refers to resources allocated to states and municipalities, is expected to be just over 2.4 trillion pesos, an annual increase of 9.9 percent.
Macías highlighted that the total expenditure proposed for 2023, of 8.3 billion pesos, will be financed mainly from tax revenues, which even without a tax reform are expected to be 4.6 billion pesos, 11.7% more than what was approved for this year. .
The increase will be driven, mainly, by the administrative strengthening and a lower implementation of tax incentives for gasoline, this in an environment in which the price of crude oil is expected to fall at the international level.
However, he stressed that only what is projected as ISR collection in 2023, of 2.51 billion pesos, will not be enough to cover the cost of pensions and debt service.
Given the growing pressure on public spending, as well as spending needs in other areas, the CIEP confirmed that a fiscal reform is necessary.
More debt per capita
Ricardo Cantú, CIEP researcher, pointed out that by 2023 there is an increase in per capita debt, going from 114,574 to 118,208 pesos, a trend that will continue in the following years.
According to the center’s estimates, at the end of the six-year term the per capita debt would be 120,000 pesos, while by 2028 it would increase to 128,155 pesos.
This means, added Cantú, that the debt is being left to the new generations, which will have to be more productive to pay more taxes, since it is with this that more than half of public spending is sustained.
Like several institutions and analysts who have pointed out, in recent days, that the macroeconomic framework presented in the 2023 Economic Package is optimistic, the CIEP considered it risky and debatable. “These are optimistic projections, but they also face scenarios with many risks. Scenarios that are uncertain and of which we must be very careful”, explained Alejandra Macías.
ana.martinez@eleconomista.mx
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