Mexico debt dynamics accelerate, but are not worrying
Monday, July 6, 2015
Subject
The outlook for public debt in Mexico.
Significance
Total public sector debt stood at 505.9 billion dollars in May, with external debt accounting for around one third of that amount, according to the most recent Finance Ministry figures. Fiscal deficits have pushed up indebtedness in recent years, but falling costs have provided a counterweight to the debt accumulation.
Impacts
- Only an external shock will significantly diminish Mexico's creditworthiness.
- Public debt should reach 50-55% of GDP when the government absorbs Pemex's pension commitments.
- In the case of a global liquidity crunch, Mexico could activate its IMF credit line, allowing it to borrow up to 72 billion dollars.
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