As expected, Moody’s lowered the rating of Mexico’s government debt to the lowest level still considered investment grade. Mexico now has two of the three major rating agencies at that level, while the third remains one notch above, but with a negative outlook. If one wants to see it positively, it is possible that the next move — which would be downward — may not occur for another year and a half. At least that is how the Finance Ministry interpreted it, and I do not doubt that the entire government is hoping to reach the 2027 election without any unpleasant surprise on that front. (El País)
However, the speed at which the environment is changing, not only economically, could alter that expectation. For example, this week Donald Trump issued a new decree aimed at “restoring the integrity of the U.S. financial system,” tightening rules on money transfers, especially smaller amounts such as remittances. I have seen different estimates from colleagues, but in general they point to a possible contraction of between 10% and 20% in that flow, which could begin to show up in a couple of months, but would reach its peak around November. We are talking about between 6 and 12 billion dollars, which can be rounded to half a point of GDP.
If those remittances were being converted into consumption or investment, then that lost half point would imply a blow of similar size to total GDP. If the average forecast among specialists was already expecting growth of 1.1%, I suppose they will now reduce that estimate by a couple of tenths for this year (the effect would come in the second half), and possibly by a full half point for next year, for which they currently forecast 1.8%. With lower growth, the results of fiscal consolidation will look worse, and that is precisely what the rating agencies are downgrading. (El País)
A second factor is the possibility that the USMCA may simply not be signed in July, as had been expected. Added to the disaster that the administration of justice in Mexico has become, this will further postpone investment decisions, which can be announced as many times as desired, but are not actually materializing. (Finanzas Públicas)
There is a third factor we have already discussed: Pemex’s creative accounting. Both in its financial reports and in its operational reports, the figures appear to lack any real foundation. Last year the Finance Ministry already used this as an excuse for its failed consolidation effort. The fiscal deficit went from 5.7% of GDP in 2024 (when López bought the elections with everyone’s money) to 4.8% in 2025. The Finance Ministry, however, insisted that it was only 4.3%, and that the rest was because Pemex owed suppliers money and they supposedly did not know about it. (El País)
This peculiar handling of liabilities, especially supplier debt, is not exclusive to Pemex, even though it is especially large in its case. It also exists in other government agencies and entities, and I attribute to this the growing gap between gross debt and financial requirements. For that reason, I believe gross debt must now be used as the reference measure. In some presentation slides from a conference by Pedro Aspe circulating on social media, he estimates that this debt could reach 60% of GDP this year, a level at which, he says, other emerging countries have lost investment grade.
The United States government has decided to cleanse the hemisphere of regimes that plunder their own populations, as Cuba has done for nearly seven decades and Venezuela for more than two. In Mexico, that model had not yet fully consolidated, but they now seem intent on preventing it. In that context, fiscal and economic fragility could trigger a sudden collapse. We have said it before, but it bears repeating: we need “outside-the-box” solutions for scenarios never before seen. Better start thinking quickly.