Moody’s Warns Mexico Faces Negative Fiscal Trend on Rising Debt and Weak Growth

Mexico City — Moody’s Ratings warned Wednesday that Mexico faces a deteriorating fiscal outlook driven by weak economic growth, steadily rising public debt and increasingly rigid budget spending.

Speaking at a forum on the outlook for the Americas, Ariane Ortiz-Bollin, the agency’s executive director of sovereign risk for the Americas, said Mexico is not facing an imminent crisis. But she cautioned that large fiscal deficits will push public debt above 52 percent of gross domestic product by 2026.

The assessment came alongside Moody’s institutional report affirming Mexico’s sovereign rating at Baa3 with a stable outlook, even as the agency noted that interest payments will absorb close to 18 percent of government revenue, squeezing the federal treasury’s room to maneuver. Ortiz-Bollin said public spending remains under pressure from financial commitments tied to the rescue of Petróleos Mexicanos (Pemex) and the funding of social programs.

Growth to Fall Short of Official Forecasts

On the macroeconomic front, Moody’s estimated that Mexico’s economy will expand by just 1.3 percent, below the official projections contained in the government’s economic package.

Despite structural vulnerabilities tied to informality, infrastructure gaps and regulatory uncertainty, the agency said Mexico retains key strengths: the size and diversification of its economy and its deep trade integration with the United States. It said market confidence will depend on whether the government puts forward a credible medium-term fiscal plan.