Banamex Says Mexico Needs Deficit with Tax Reform to Improve

According to Banamex, the Ministry of Finance could stimulate the economy through increased spending, as long as it is accompanied by tax reform. In a recent press conference, Sergio Kurczyn, the director of Economic Studies at Banamex, mentioned that in a year when economic activity in Mexico may not experience growth, it would be most beneficial to increase spending. However, he pointed out that a drawback is that the government has raised its deficit to 6%, which limits the country’s options in the coming years.

“The only way to move forward is by increasing the deficit through tax reform, and this will calm the markets regarding long-term sustainability,” Kurczyn commented during La Plenaria 2025, an event where the most important investors meet. Iván Arias, deputy director of Economic Studies at Banamex, emphasized the importance of stabilizing debt in the medium term. The economist highlighted that credit rating agencies view positively those governments that present plans that ensure sustainable revenue. Mexico is on the brink of losing its investment grade with Fitch Ratings, which currently has it at BBB-, while Moody's maintains it at Baa2, and Standard and Poor's at BBB.

It is crucial for the government to consider not only increasing spending in the short term but also to develop a solid fiscal strategy that guarantees long-term sustainability. If a balance can be achieved between the deficit and an appropriate tax reform, better credit ratings can be attracted, which would provide a significant boost to the national economy. Protecting the credit rating is key to maintaining investor interest and economic stability in the country.