Mexico Fiscal Deficit Runs 276 Billion Pesos Below Plan Through August 2026

Mexico's public finances surpassed the official plan through August 2026, according to the Finance Ministry's monthly report to Congress. The ministry reported a budget deficit of MXN 739 billion, which was MXN 276 billion less than the allocated deficit. This improvement was driven by a surge in value-added tax (IVA) and oil revenues, while income tax collections weakened.

The IVA collections reached MXN 1.19 trillion, an 11.4 percent increase in real terms, largely due to strong consumer spending and tighter customs work. Oil revenues also rose 10.5 percent in real terms to MXN 690.4 billion. However, income tax collections fell 5.6 percent in real terms to MXN 2.00 trillion. Social development spending increased by 8.4 percent, health spending by 14.3 percent, and education by 7.3 percent.

Spending remained below plan, with spending outside payrolls falling 4.4 percent. The interest bill is shrinking, and debt service costs fell 3.5 percent in real terms, running MXN 122 billion below the program. The historic balance of public-sector financing requirements stood at 51.5 percent of GDP at the end of August, with net federal government debt at 48.4 percent of GDP.

The government's actions, such as liability management and the stronger peso, helped reduce the interest bill. Despite the positive August report, the final deficit path for next year depends on various factors, including Congress' budget, Pemex costs, and oil prices.