The plan presented by the government of Andrés Manuel López Obrador to combat inflation would represent an expense of around 1.4% of the Gross Domestic Product (GDP), that is, approximately 404,826 million pesos.
Juan Pablo de Botton, Undersecretary of Expenditures of the Ministry of Finance and Public Credit, explained during the Department’s Chair at the Faculty of Economics of the UNAM, that these resources were already contemplated in this year’s expenditure, through the calculations that have been made to gasoline subsidies, social programs and transfers to households.
“All these resources were available in the budget and it is their correct exercise and orientation that allows us to allocate around 1.4% of GDP, without this deteriorating public finances. With healthy public finances, we can seek a more controlled inflation and favor it based on the package that was announced”, he explained.
The Package against Inflation and Famine includes a series of production, distribution and foreign trade measures to combat the high levels of inflation that have occurred in recent months.
The Secretary of the Treasury stressed that “this support is not financed with a government deficit, but rather we have the highest income from the export of crude oil that satisfies the need to cushion the increase in the price of gasoline.”
financial pressure
Although the government indicates that the package will not have an extra cost to the public treasury, analysts consider that it could be an additional pressure on public finances, since it has little room for maneuver.
“The measures imply greater public spending and, although the President mentioned that the resources will come from oil surpluses, it is unlikely that they will cover all the proposed stimuli,” said Gabriela Siller, director of Economic and Financial Analysis at Banco Base.
In this sense, James Salazar, deputy director of Economic Analysis at CIBanco, mentioned that although the proposed measures may not represent a significant additional expense, the country’s public finances have little room for maneuver and even mentioned that the opportunity to use oil surpluses in other items that could boost the recovery of the economy.
For her part, Janneth Quiroz, deputy director of Economic Analysis at Monex, explained that it seems that the government is very confident in the surplus oil revenues obtained thanks to a higher price of a barrel of oil; however, the estimated average of 92.9 dollars per barrel this year could be lower, depending on how the European conflict develops.
According to Treasury estimates, it is expected that this year an extra 535.509 million pesos will be obtained from oil revenues as approved in the 2022 Federation Revenue Law. However, lower tax revenues are expected.