Breaking News
0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Mexico raises gross debt limit to 70% for rest of president's term

Economic IndicatorsSep 07, 2020 07:25PM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. FILE PHOTO: Mexico's President Andres Manuel Lopez Obrador delivers his second state of the union address at National Palace in Mexico City

By Abraham Gonzalez

MEXICO CITY (Reuters) - Mexico has raised a non-binding limit for gross debt to 70% of gross domestic product (GDP), almost 20 percentage points above last year's level, for the remaining four years of the term of its fiscally conservative president.

Mexico's debt to GDP ratio is closely watched by ratings agencies, which this year stripped national oil company Petroleos Mexicanos of its investment grade rating and who warn that the nation's sovereign rating could be next.

Ratings agencies have cited the impact of the coronavirus pandemic, interest rate changes and a depreciation of the peso as the main risk factors for further downgrades.

Charles Seville, head of North American sovereign ratings at Fitch Ratings, said a further downgrade will depend in part on how much the government deviates from its fiscally conservative course.

"There are several triggers, one is if indeed the debt to GDP ratio continues to rise or we believe it is going to continue to rise. And that could result from either policies or the evolution of the virus and the economy from here. So that's pretty important."

Mexico had a gross debt to GDP ratio of 60.2% updated to June, about 10 percentage points above the level at the close of 2019, official statistics show. In a document issued after the president's state of union address last week, the government revealed the new upper limit of 70%.

The limit is not legally binding.

The Mexican finance ministry did not respond to requests for comment.

President Andres Manuel Lopez Obrador said his government's decision to avoid debt-fueled economic stimulus meant the country had healthy finances.

Lopez Obrador also promises an austere 2021 budget - due to be presented to Congress by the finance ministry late on Tuesday.

"Last year, we didn't increase debt and that helped us," Lopez Obrador said during a regular news conference, adding that the ratio had increased because of the economic contraction and a weaker peso.

The central bank predicts the economy will contract by almost 13% because of the pandemic.

"Because of the pandemic, it was no longer possible to maintain the same level of debt but we'll recover and grow," Lopez Obrador said.

Mexico raises gross debt limit to 70% for rest of president's term
 

Related Articles

Bank of England's chief economist Haldane to quit
Bank of England's chief economist Haldane to quit By Reuters - Apr 13, 2021

LONDON (Reuters) - The Bank of England said on Tuesday that its chief economist, Andy Haldane, will leave the central bank later this year to become chief executive of the Royal...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (4)
Dan Hodel
Dan Hodel Sep 07, 2020 10:41PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
If Trump can manipulate the USD, it’s fair game to other countries.
Jose Reyes
Jose Reyes Sep 07, 2020 9:12PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
To be honest the peso devalued 13.9% from end 2019 till today rate so the 10% increase of debt sound reasonable
Kaveh Sun
Kaveh Sun Sep 07, 2020 8:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Not bad, usa debt is 110% gdp
Ernesto Inzunza
Ernesto Inzunza Sep 07, 2020 7:28PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That president is sinking Mexico
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email