By Anthony Harrup
MEXICO CITY -- The Mexican government said it expects next year's federal budget to include a smaller fiscal deficit than this year's, partly as a result of economic growth and lower global interest rates.
In a 2024 budget update and preview for 2025 submitted Wednesday to the congress, the Finance Ministry said the fiscal deficit is expected to increase to 5.9% of gross domestic product this year, and then fall to 3% of GDP in 2025, leaving public-sector debt around 50% of GDP for both years.
This year's budget includes the widest deficit in decades and follows five years of budget austerity under Mexican President Andrés Manuel López Obrador, whose six-year nonrenewable term ends in September. The extra spending this year includes more money for social programs in an election year, and investment to complete infrastructure projects.
Next year's revenue is expected to increase with growth in economic output and employment, as well as greater tax-collection efficiency, while lower interest rates internationally will reduce the cost of debt, the ministry said.
Mexico's budget proposals to congress are usually submitted in early September, although this year the 2025 budget plan will be presented later as a new administration is due to start on Oct. 1 following June elections.
The Finance Ministry expects the economy to grow between 2.4% and 3.5% this year, and projects growth of 2% to 3% for 2025. The budget outline assumes an average price for Mexico's crude oil exports of $71.30 a barrel this year and $58.40 for 2025.
Crude oil production for next year is projected at 1.86 million barrels a day, up slightly from 1.85 million in 2024. Crude exports are estimated to average 958,400 barrels a day in 2025, down from 967,600 barrels a day this year.
Write to Anthony Harrup at anthony.harrup@wsj.com
(END) Dow Jones Newswires
03-27-24 1451ET
