Mexico's public debt will remain stable in 2019

The public debt as a percentage of the Gross Domestic Product (GDP) will remain stable and on a sustainable trajectory in 2019, anticipated the Ministry of Finance and Public Credit (SHCP).

Mexico's federal government's financing needs for 2019 amount to 7.2 percent of GDP. Photo: Pixabay
Mexico's federal government's financing needs for 2019 amount to 7.2 percent of GDP. Photo: Pixabay

When presenting the Annual Financing Plan 2019, the entity estimated that the Historical Balance of the Public Sector Financial Requirements (SHRFSP), the most extensive debt measure, is at a level of 45.3 percent of GDP at the end of 2019.

"With this, the public debt as a percentage of GDP will remain stable and on a sustainable trajectory," the agency in charge of the country's public finances argued in a statement.

The federal government's financing needs for 2019 amount to 7.2 percent of GDP, as a result of the following elements: the federal government's deficit of 1.9 percent of GDP, amortization of domestic debt by 4.9 percent of GDP and repayments of external debt by 0.4 points of GDP.

The Ministry of Finance affirmed that prudent management of public debt will continue to be a fundamental element of economic policy.

The debt management strategy for 2019 considers the following elements: covering the federal government's financing needs at reduced costs, at a long-term horizon and with a low level of risk.

Preserve the diversity of access to credit in different markets, privileging the use of the internal market, and promote the development of liquid and deep markets, with yield curves that facilitate access to financing for a wide range of public and private economic agents.

The agency reported that in order to cover the financing needs of the federal government, in 2019, the local debt market will be used mainly.

The external credit will be used in a complementary manner when the conditions in international markets are favorable and allow to diversify the sources of financing, it said.

The fiscal policy will be oriented to maintain a stable and sustainable trajectory of the public debt, particularly the actions of the public debt policy will be oriented to maintain a portfolio of robust and well diversified liabilities.

This will allow reducing the impact of external shocks on public finances, so that episodes of volatility in financial markets have a limited effect on the financial cost of the debt.

In order to strengthen the federal government's debt portfolio, it will be sought to carry out frequent liability management operations, which will also allow adjusting the use of the various instruments to the conditions prevailing in the financial markets.

In addition, the federal government will continue to implement a debt management policy based on a strict and responsible use of public debt guided by the principle of transparency.

In this way, the federal government will seek a proactive communication with all market participants, which promotes good practices and a better financial system.

"In summary, the debt policy for 2019 will be aimed at strengthening the public debt portfolio as an indispensable element for the soundness of public finances," the agency stressed.