In a global economic context marked by uncertainty, the Public Sector Financial Requirements (RFSP) have taken a central role in discussions about Mexico's fiscal sustainability. The organization México Evalúa has indicated that, until June of this year, the RFSP have experienced a significant increase, the second largest for a similar period in the current six-year term. This growth is not only notable for its magnitude, but also for being the highest level recorded since 2008, when the Ministry of Finance and Public Credit (SHCP) began to disclose this key indicator.

What are RFSPs and why are they important?

RFSPs represent a comprehensive measure of public debt and other government financial commitments, beyond traditional debt. This concept includes the net debt of the federal government, as well as other contingent liabilities that could materialize into financial obligations for the State. In essence, RFSPs offer a more complete view of the financial status of the public sector, allowing for the assessment of the government's ability to meet its commitments and finance its public policies without putting economic stability at risk.

Historical Growth of RFSP in 2023

The analysis by México Evalúa shows that the increase in RFSP in 2023 has been notable, reaching levels not seen for more than a decade. This increase reflects, in part, a context of greater financing needs by the government to carry out strategic projects and, at the same time, maintain social spending.

The Ministry of Finance has projected that, at the end of this year, the RFSP will be at a historical level, representing 5.9% of the Gross Domestic Product (GDP). This is relevant data, since such a high level of RFSP implies that the government has resorted to significant debt to finance its operations, which could have important implications for the economy in the medium and long term.

Factors that Contribute to the Increase in RFSP

There are several factors that explain the increase in RFSP in 2023. One of the most notable is the need for financing to complete emblematic infrastructure works of the current administration. Projects such as the Mayan Train and the Dos Bocas Refinery have required substantial investment, and much of this financing has been obtained through debt.

These projects, although they are considered priorities for the economic and social development of the country, have also generated debates about their financial viability and their long-term impact on public finances. The cost of these projects is not only reflected in the current budget, but also in future financial commitments that the government must honor.

Another factor that has contributed to the increase in RFSP is the need to maintain social spending in a complicated economic context. The COVID-19 pandemic left significant consequences on the Mexican economy, and the government has had to increase its spending on social programs to mitigate the effects of the crisis. This additional spending has increased pressure on public finances and led to greater debt.

Implications of a High Level of RFSP

The fact that the RFSP is projected at a level of 5.9% of GDP by the end of 2023 has several important implications. First, such a high level of RFSP may raise concerns about the sustainability of public debt. Although debt can be a useful tool for financing development projects, it is crucial that it is kept within manageable levels to avoid a debt crisis in the future.

In addition, a high level of RFSP may limit the government's ability to respond to future economic shocks. If the government is already committed to high levels of debt, its ability to increase spending in response to an economic downturn or national emergency may be restricted. This could affect the country's ability to recover quickly from future crises.

Future Perspectives and Considerations

Looking ahead, it is essential that the country's financial authorities carefully manage RFSPs. Although the financing of infrastructure projects is important for economic development, it is necessary to ensure that the associated debt does not compromise the country's fiscal stability.

To maintain investor confidence and avoid an unsustainable increase in debt, it will be crucial for the government to implement responsible fiscal policies. This could include a combination of measures to increase tax revenue, such as tax reforms, and efforts to control public spending.

In addition, it will be important to closely monitor the performance of infrastructure projects to ensure that they generate the expected economic benefits. If these projects succeed in boosting economic growth and improving productivity, they could justify additional borrowing. However, if the projects do not meet their expectations, they could become a financial burden for the country.

The increase in Public Sector Financial Requirements in 2023 is an issue that deserves attention, given its potential impact on the Mexican economy. Although debt has made it possible to finance important infrastructure projects, it is essential that it is managed prudently to avoid compromising long-term fiscal stability. The balance between economic development and financial sustainability will be key to the country's future success.