Debt, good move or disguised lie? | Article

TO: David Ordaz

In 5 years we have heard Andres Manuel Lopez Obrador that its management will not generate any debts and that it can be managed without resorting to international organizations such as International Monetary Fund or The World Bank as “neoliberal governments” did, where only “the people” were in debt.

Beyond López Obrador’s speeches or outright lies, the Treasury Department announced that it had made the year’s first offering in the international financial markets, worth $7.5 billion, which they believe positions Mexico as the largest issuer of a sovereign nation with a BBB rating globally. and also means lower financial costs for the country.

According to the official statement:

The participation of new global investors in various regions is a result of the efforts made by SHCP to expand the investor base, reflecting confidence in Mexico’s public finances and economic stability.

In addition, the agency also offered $4 billion over 12 years with a yield of 6.096%. Compared to the first issue in 2023, the bond rate was 6.35%.

According to various financial analysts, this debt issue can be considered a success as the demand was almost three times the amount offered.

It should also be taken into account that public sector external debt has a net ceiling of $18 billion, while domestic debt has a limit of P1.9 trillion for 2024.

However, even with this cushion, the debt ceiling indicates that a budget deficit of 4.9% of gross domestic product is expected in the final year of Andrés Manuel López Obrador’s government, the highest level since 1988.

While it is true that there is confidence in the government’s finances, it is also true that this announcement is cleverly disguised, since the said bond offering is essentially an acquisition of debt that will presumably be used to pay off more debt (although this sounds redundant) and to pay for multimillion-dollar megaprojects such as the Mayan Train, Transismo, the Dos Bocas oil refinery and airports in the southeast of the country,

Among those jobs, the cost of which has multiplied by thousands, and assistance programs, scholarships, pensions, etc. Let’s be clear: there is not enough money for this. We’re also in an election year.