In the midst of the high interest rates maintained by central banks around the world, the financial cost of the debt skyrocketed in the first two months of the year and was even higher than what the Ministry of Finance and Public Credit (SHCP) had projected for the period.
According to the Public Finance and Public Debt Report as of February, the federal government allocated 150,095 million pesos to pay debt service, which was 47.4% higher than last year.
In addition to the substantial increase in the financial cost, it was 8,550 million pesos higher than what the Ministry of Finance had projected for the first two months of 2023.
Since last year, high levels of inflation worldwide have led central banks to increase their interest rates to unprecedented levels to try to contain inflation.
In our country, the Bank of Mexico, in charge of Victoria Rodríguez Ceja, has raised its interest rate to historical levels. Just this Thursday, the Governing Board of the central bank decided to increase the rate another 25 base points, to bring it to 11.25 percent.
The foregoing will put pressure on financial costs, since the Treasury expected that the interest rate would be around 8.50% at the end of this year, something that has been exceeded.
According to Gabriel Yorio, Undersecretary of the Treasury, for every 100 basis points more than what they estimated in the interest rate, the cost of the debt will increase between 20,000 and 30,000 million pesos.
subexercise
The Treasury report showed that, in the first two months of the year, the government made public spending for 1 billion 211,036 million pesos, which resulted in a 3.5% decrease compared to the same period of the previous year.
This decrease was accompanied by an under-exercise, that is, money that was budgeted for the period but that the government did not use. Said sub-exercise was for 204,896 million pesos.
“At the end of February, the net expenditure of the Public Sector amounted to 1 trillion 211,000 million pesos. Inside, he highlighted that 52.5% of spending on social development was allocated to social protection policies, ”said the Ministry of Finance.
Inside, it was observed that it was the programmable expense that presented a decrease of 8% in annual comparison, with resources exercised for 820,029 million pesos. Meanwhile, non-programmable spending, without considering the financial cost, reported 240,911 million pesos, a growth of 1.9 percent.
“There was a budget deficit of 101,269 million pesos and a surplus in the primary budget balance of 48,827 million pesos, behaving favorably with respect to what was anticipated. Finally, the Financial Requirements of the Public Sector, were located at 135,116 million pesos,” said the agency.
They were 87,500 million pesos less than expected
Public revenues continued below the programmed
Budget revenue reported positive growth in the first two months of the year, but continued to be below the collection expected in the period. According to the Public Finance and Public Debt Report as of February, budget revenues totaled 1 trillion 109.768 million pesos, an annual growth of 4.4%.
In addition, it is the highest growth observed for a similar period since 2020, when revenues grew 6 percent.
“Public revenues maintain a good performance, which reflects the strength of the national economy,” said the Treasury.
Despite the good performance of revenues, they were located 87.500 million pesos below what was programmed, mainly due to a lower collection on the oil side.
Oil gives, oil takes away
In the detail of the report, it was observed that the decrease in the price of oil had various effects on budget revenues, mainly in oil tankers and in the Special Tax on Production and Services (IEPS) on gasoline.
The Treasury figures showed that, in the first two months, oil revenues totaled 159,632 million pesos, 2.4% more at the annual rate. However, despite the growth, the oil collection was 90.605 million pesos below what was programmed, due to the fall in the prices of hydrocarbons.
In contrast, on the side of tax revenues, this fall has had a positive effect by reducing the fiscal loss generated by the stimuli to the price of gasoline, which meant that last year the collection of IEPS on fuels was in negative territory.
In this way, the income obtained from taxpayers’ payment of taxes totaled 741,484 million pesos between January and February, which represented an annual increase of 4.2 percent.
The income from the payment of taxes also did not meet its goal and was located at 31,688 million pesos below it.
