Mexico’s Pena Nieto Proposes 1% Deficit for 2015 Excluding PemexBrendan Case and Eric Martin
Mexican President Enrique Pena Nieto asked Congress to approve a budget deficit for next year of 1 percent of gross domestic product as the government seeks to trim its shortfall.
The deficit would narrow from 1.5 percent approved for this year, Finance Minister Luis Videgaray said today as he turned in the proposal at Congress’s lower house. The calculations assume growth of 3.7 percent for next year, the fastest since Pena Nieto took office in 2012, as well as an average oil price of $82 a barrel and 2.4 million barrels per day of production for state-owned oil-company Petroleos Mexicanos, Videgaray said.
“The economic program we’re presenting establishes the necessary foundations to consolidate and accelerate our economic growth in an environment of stability and social inclusion,” Videgaray told lawmakers. “It also contains elements to put into action the structural reforms approved by the Congress.”
Mexico’s government seeks to reduce the deficit in 2015 and erase it in coming years after increasing spending this year in an effort to boost an economy that grew 1.1 percent last year, the least since the 2009 recession. Pena Nieto also pushed through an overhaul to open the state-controlled energy industry to private investment and lessen the government’s dependence on oil revenue that funds about a third of federal spending.
Pena Nieto isn’t proposing new taxes or increasing existing duties, Videgaray said. The government last year raised the sales tax in areas bordering the U.S., a move opposed by the National Action Party, the second-biggest group in Congress after Pena Nieto’s Institutional Revolutionary Party. Consumer confidence in January tumbled to the lowest level in almost four years and remains below year-ago levels.
Mexico’s government in November won approval for the widest budget deficit in four years for 2014. The economy was held back last year by a lag in public spending after the presidential transition and debt defaults by the nation’s largest homebuilders.
The government forecasts economic growth will accelerate in 2015 from 2.7 percent this year after Pena Nieto ended Pemex’s oil monopoly and opened the telecommunications industry to more competition, moves that his administration expects will lift growth to about 5 percent starting in 2016. Gross domestic product expanded 1 percent in the second quarter from the previous three months, exceeding analysts’ estimates, amid a recovery in the U.S., the dominant buyer of Mexican exports.
The government proposes spending 4.6 trillion pesos ($350 billion) next year, Videgaray said. That would be about 2.7 percent more than the 4.48 trillion approved for this year.