Just days before Donald Trump’s 25% tariffs on Mexican exports take effect, the Ministry of Finance released its Public Finances and Public Debt Report for the first two months of 2025. The report details significant budget cuts ordered by President Claudia Sheinbaum to tackle the fiscal deficit inherited from Andrés Manuel López Obrador.
The government spent 1,425,519 billion pesos in the first two months of the year. In real terms, this represents a 17% drop—approximately 292,000 million pesos—compared to the same period in 2024. Additionally, it was 220,283 billion pesos less than planned, indicating strict spending control.
Major Cuts Among Affected Departments
- Defense: Lost over 107,000 million pesos.
- Security: Declined by more than a third.
- Health: Reduced by 30,000 million pesos.
While budget cuts are prevalent, social programs like the Pension for the Elderly and IMSS-Bienestar have been strengthened. President Sheinbaum believes these measures will maintain her popular support.
She recently stated in Bavispe, Sonora, that “social programs will be the salvation of the people” against tariffs as over 800,000 million pesos in disbursements could stimulate consumption. However, their effectiveness in preventing a GDP decline and widespread poverty remains uncertain.
Moody’s has already downgraded Mexico’s outlook to “negative.” If the government fails to reduce the deficit as promised (from 6% to 3.9% of GDP), the rating will fall, increasing financing costs and scaring off investments.
The peso continues to weaken; it closed at 20.47649 per dollar yesterday. This means higher prices for many goods and services, potentially affecting the most vulnerable populations. The Center of Economic Studies in the Private Sector (CEESP) reports that the threatening tariffs are already slowing nearshoring and weakening economic activity faster than expected.
Despite optimism, financing for many announced projects is doubtful, and security advances may not endure. Nevertheless, a recent Enkoll survey for El País shows President Sheinbaum maintains an 82% approval rating. This strong support could diminish if economic deterioration accelerates.
President Claudia Sheinbaum has chosen fiscal discipline to restore balance, convinced that responsible public finances can coexist with social justice. Governing is not only about controlling spending but also about building a better future. If she manages to sustain social spending, revive investment, and navigate external challenges, Mexico could emerge stronger. It won’t be easy, but it’s still possible. Unlike other leaders who deny reality, she faces it head-on. This approach may define the course of her government and the nation.
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