They anticipate optimistic Economic Package 2023; see pressure on spending

In a scenario of economic uncertainty, with high levels of inflation, rising interest rates, and an irremediable increase in spending items such as pensions and debt, analysts expect the 2023 Economic Package to be optimistic despite the pressures on public spending that they will have to face without a fiscal reform.

It’s going to be a complicated package. I think they have all been somewhat complicated, but this time the discussion of the tax reform will not take place, that was for last year, now only adjustments are expected in terms of collection efficiency. Beyond that, we do not see that there is a discussion that allows raising or creating taxes,” said Alejandra Macías, director of the Center for Economic and Budgetary Research (CIEP).

Although the government of Andrés Manuel López Obrador has not implemented a tax reform, tax revenues have been maintained, even in the midst of the economic crisis caused by the Covid-19 pandemic through collection efficiency, with greater control, mainly in the area of ​​large taxpayers.

However, analysts recalled that spending needs continue to grow, and issues such as pensions or debt service, where spending cannot be cut, will put pressure on the 2023 budget.

In this sense, Mariana Campos, coordinator of Public Expenditure and Accountability of México Evalúa, commented that these expenses displace other items in the face of limited income, for which the government would choose to cut the budget in other sectors.

“The Executive power has broad powers to modify the budget throughout the year, for example, this year it created a decree to create the complementary stimulus for gasoline. Then, in case what is approved does not suit you, you can modify it. There is ample room for it to make cuts, as has been seen in past years,” he added.

little prudence

In the case of the macroeconomic framework, analysts foresee that, like every year, the discussion will be generated about optimism in the projections that the Ministry of Finance and Public Credit (SHCP) will present, mainly in relation to economic growth.

“We would like it to be as Rogelio Ramírez de la O, Secretary of the Treasury, said, prudent given the circumstances and the current context with high uncertainty, that is what we would like. I think it will not be very prudent, and it always happens, every year we have this discussion about the macro picture, it will surely have an optimistic bias, “said James Salazar, deputy director of Economic Analysis at CIBanco.

He added that given the current context, where the Covid-19 pandemic is not over, there is a war in Eastern Europe, and inflation has reached historic levels in several countries, growth of 2% for the following year looks complicated.

A few days ago, during Morena’s plenary session in the Chamber of Deputies, the Secretary of the Treasury told legislators that the 2023 Economic Package would be realistic, with an increase in the resources allocated to social programs.

Programs and flagship projects, the winners

Although spending is expected to grow inertially, once again social programs and the government’s flagship mega projects will be the winners and it is expected that considerable increases will be observed in the resources that they will be able to use in 2023.

“On the spending side, there is a temptation to spend more due to the fact that the closing of the administration is approaching. And 2023 will be the prelude to the year of elections”, commented Mariana Campos.

In this sense, it is expected that social programs such as the Pension for the Welfare of Older Adults, Sembrando Vida, Fertilizadores, among others, will be reinforced, while resources will continue to be allocated for mega works, although not as many compared to other years considering that Several works (such as the Felipe Ángeles Airport) have already been delivered or are expected to be inaugurated in the short term.

In the case of the Mayan Train, the work is scheduled to be completed precisely in 2023.

On the other hand, Héctor Villarreal, professor at Tec de Monterrey, recalled that Petróleos Mexicanos has been one of the spoiled in the six-year term despite the austerity speech, so it would not be surprising if it were granted more facilities and support in 2023.

On September 8, the Treasury will deliver to legislators the Economic Package 2023, which will contain the General Criteria of Economic Policy, the Law of Income of the Federation, the Miscellaneous Fiscal and the Budget of Expenditures of the Federation.

ana.martinez@eleconomista.mx