Mexico Budget 2012
Highlights of Mexico Budget 2012:
- The 2012 Mexico budget will not see any changes to the tax code.
- According to the planned budget there could be a fiscal deficit of 36.7 billion pesos, which will be equivalent to 0.2 percent of the GDP. This figure does not include investments made in the Petroleos Mexicanos, a publicly held oil company.
The budgetary deficit for 2011 fiscal has been pegged at 42 billion pesos, which will be equal to 0.3% of Mexico’s GDP.
- The Mexican government is expected to earn 3.28 trillion pesos in 2012 and the maximum oil price for the period has been forecast at $84.9 per barrel. Mexico earns almost 33.34% of its total income from oil taxes.
- The present administration estimates that in 2012 the Mexican economy shall grow at 3.5 percent compared to 4% in 2011 fiscal.
- In 2011 the average exchange rate of the peso is going to be 11.9 for 1 US dollar and is expected to further depreciate to 12.2 in 2012.
- The government will issue domestic debt instruments worth 395 billion pesos and it prefers bonds for the purpose.
The revenue generated from these sales will be used to cover the fiscal shortfall.
Mexico Budget 2012 – Analysis:
If the proposed 2012 budget is accepted then it will be the third straight year that the North American country will face a budgetary shortfall. Sergio Luna, who heads the economic research department at the Banamex unit of Citigroup Inc, opines that the government has done the right thing by opting not to make any radical changes. According to Luna the budget will be acceptable for all the stakeholders.
Delia Paredes, who works as the chief economist with Grupo Financiero Banorte, has termed the proposed budget a well balanced one that focuses primarily on financial discipline.
Ernesto Cordero, the Finance Minister of Mexico, has stated that the budget aims to avoid confidence related problems that are affecting the other developed countries. Cordero reveals that the budget focuses on proper management of financial systems and resources.
The growth predictions of Mexico in 2012 have been further readjusted at a lower rate given the present condition of the US that accounts for approximately 80 percent of its export. The Banamex unit of Citigroup Inc has calculated that in 2012 the national economy will grow at 3.5 percent compared to 3.9% in 2011 fiscal. Economists had stated that in 2012 the Mexican economy’s growth rate will be 3.7 percent and in 2011 the growth rate will be 3.95%.
Cordero states that the administration is not in a position to take any risks or make a mistake. He has called for an income law apart from a responsible budget, which helps in long term economic and social development.
Delia Paredes has further stated that the fiscal deficit could be widened once the proposed budget is discussed in the parliament.