2025 Budget: A Look at Unavoidable Expenses
The Chamber of Deputies has approved the 2025 Federal Expenditure Budget (PEF), which will soon be published in the Official Journal of the Federation. The total public spending amounts to 9.302 trillion pesos, of which 7.680 trillion, equivalent to 82.5%, will be allocated to mandatory expenses. This percentage exceeds the 80.8% of this year's budget and represents the highest figure since 2022, according to data from the Treasury. Among the most notable expenses are: debt payments of 1.149 trillion pesos, contributions to the states of 1.340 trillion, and pensions totaling 1.637 trillion, which together represent 53.72% of all mandatory expenditures.
This increase in expenses limits funding for more productive areas, such as the investment budget, which next year is estimated at 843.312 billion pesos, a figure lower than this year's 958.100 billion. This implies cuts in sectors that have already faced reductions in previous years, such as education and health. Mariana Campos, director of Mexico Evalúa, commented: “The reflection of a government’s priorities is in its budget. If there aren’t enough resources allocated, proposals remain wishes. The 2025 Economic Package seems more like a survival plan than a boost to economic growth, health, security, or the reduction of inequality.” According to the director, there are measures that could be implemented to lower these mandatory expenses and increase revenues, such as strengthening the fiscal autonomy of the states, establishing a medium-term fiscal framework, and making the destinations of debt transparent. Additionally, it is suggested to calculate spending on rights, such as health, based on the number of people needing care, to protect it from cuts. Investment could also be promoted alongside the private sector given the government’s budget constraints. Regarding GDP, physical investment will be at 2.3%, the lowest percentage in more than ten years, with areas like road, water, and fuel infrastructure being the most affected. This situation limits future revenue generation, economic development, and investment attraction, according to an analysis by Mexico Evalúa on the PEF 2025. Christopher Cernichiaro, a postdoctoral researcher at UAM, explained that the pressure to reduce a deficit, along with rising mandatory expenses, makes investment spending for infrastructure very vulnerable, as it is not mandatory, jeopardizing the execution of new projects. According to the decree approved by the deputies, next year's budget does not foresee resources for multi-year spending on infrastructure projects nor for new projects through Public-Private Partnerships. Despite an increase of 29.200 billion pesos for the IMSS-Bienestar budget, this does not compensate for the cuts in the Health Department, which faces a reduction of 33.400 billion, and the Health Services Contribution Fund (FASSA), which loses 57.300 billion. As a result, the budget for the care of people without social security will drop by 22%, equivalent to 84.000 billion less compared to 2022. This will create a historic financing gap, where spending for those with social security will be 95% higher than for those without, marking the largest difference in 20 years.
The outlook for the 2025 budget is concerning, as it prioritizes mandatory spending at the expense of investment and social development. It is vital to implement policies that not only seek to balance accounts but also promote long-term wealth generation through real investment boosts in infrastructure and health. Without investment, it will be difficult to see sustained growth that benefits the population as a whole.
