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Mexico’s Ministry of Finance delivered the 2026 budget proposal to Congress for approval. Congress faces deadlines of 31 October to pass the Income Law and 15 November to approve the Expenditure Budget.
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The budget balance is projected at -3.6% of GDP, while the primary balance is anticipated to reach 0.5% of GDP. The broad deficit (RFSP) is estimated at -4.1%, an improvement of approximately 0.2% of GDP.
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Notably, the federal government deficit will increase from 4.2% to 4.6% of GDP, reflecting continued government support for Pemex.
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Broad debt (SHRFSP) is forecast to remain steady at 52.3% of GDP in 2026.
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Proposed internal and external debt ceilings are MXN1.78trn and USD15.5bn, respectively.
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As the Federal Government will run a deficit of 4.6% in 2026, higher than the 4.2% estimated for 2025, its borrowing needs will increase next year.
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For now, the strategy appears to focus on extending duration, with issuance concentrated in long-term Udibonos.
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The government will continue its path of broad deficit consolidation, though issuance will rise to provide further support for Pemex.
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Rating wise, the government will maintain a prudent approach to preserve investment-grade status. Downgrade risks seem in check, as long as the economy avoids a deep downturn.