The Balance of Payments data confirms what we discussed on Monday. It is the external sector that prevents the weakness of the domestic economy from showing up as an outright contraction. In the first quarter of the year, the balances of goods and services advanced by 1.6 points compared with the previous year, while in the second quarter the advance was 1.9 points. Although it’s not exactly the same calculation, if we subtract this effect from published GDP, the internal economy would have contracted by one point of GDP in the first quarter, and in the second would have improved a bit, but still remained negative at -0.7%.
Interestingly, the Balance of Payments also reveals that foreign investment, which Ms. Sheinbaum presented as historic, was actually slightly lower this quarter. In the first quarter, it exceeded 36 billion dollars, while this time it was below 35 billion. On the positive side, this year’s new investment is a little better than last year’s, and even higher than in 2023. Almost 3.15 billion dollars, compared to 1.876 billion the year before, and 3.029 billion the year before that. Even so, these remain the lowest years for new foreign investment in the century.
Now, on Monday I made a mistake. I told you that, to win the 2024 election, López Obrador had spent 8 trillion pesos. That is incorrect. That figure is the increase in debt from the time they took power (September 2018) to June of this year. In just under seven years, that has been the increase in debt, but it is unfair to associate that entire figure with policies explicitly aimed at securing power.
I believe the measures aimed at that goal consist of the grandiose infrastructure projects and the vote-buying through cash handouts, and those do not add up to eight trillion. In canceling the NAIC airport and building the AIFA, López Obrador spent 25 billion dollars, equivalent to half a trillion pesos. The same magical figure applies to Dos Bocas and the Maya Train, as I pointed out three years ago in México en el Precipicio (Ariel, 2022). These three projects together add up to 1.5 trillion pesos.
The “rescue” of Pemex, which did not deliver more crude production, nor more revenue for the treasury, cost one trillion pesos, according to IMCO’s estimates, which we have also replicated several times. That brings the tally to 2.5 trillion.
From 2022 to 2024, there was a notable increase in cash transfers, which I believe should be considered part of the election buyout. Before that, López Obrador had eliminated the previous social programs and replaced them with his own (the handouts), but with only a small increase in amounts. Starting in 2022, this changed. The sum over those three years, interestingly enough, comes to another 500 billion pesos. That makes three.
But this increase in debt had to be financed in those years, with rising rates—both due to the tightening cycle to contain inflation and above all due to the government’s greater demand for funds. When you want to borrow more, creditors tend to raise the cost. From 2022 onward, the financial cost has been 1.2 percentage points higher than in prior years. Applied to the accumulated debt, this adds another half trillion pesos through 2024, and another similar amount for the current administration. In total, four trillion pesos is the cost of winning the election.
I thought it was worth clarifying, because it’s a considerable figure, and because there is lasting damage both in the size of the debt and in its cost. We don’t need to exaggerate it.