Economics: Public finance doing relatively well but some points could portend problems to come
Public finances for the first four months of 2022 showed a relatively favorable evolution in terms of growth in revenue and contained public spending. However, this performance may not be sustainable if we consider the growth trend in the public debt.
The improvement in public sector revenue was largely bolstered by a substantial recovery in oil revenue, which experienced a whopping 42.7% increase in real terms. Revenue also increased due to the growth in income tax collection (18% in real terms) and the VAT (3.8%). This is partly attributable to a very moderate economic recovery compared to last year, but also due to the delay or even negative rebates to taxpayers whose annual fiscal declarations showed a balance in their favor. In contrast to these increases, the IEPS tax collection revenue corresponding to fuels accumulated a 79.4% decline due to the government's strategy of employing fiscal stimuli in order to maintain stable prices at the pumps.
With regard to public spending, from January-April 2022, both current spending and physical investment posted declines (financial investment increased mainly due to the resources channeled to Pemex and the Dos Bocas oil refinery). At the same time, financial costs remained stable, and there was a significant 13.2% increase in automatic revenue sharing transfers to states and municipalities.
One point of note is that the growth in the gross public debt is considerably higher than the Public Sector Borrowing Requirements (PSBR) reported for the first four months of 2022. This is not typical at all, and could foreshadow a substantial increase in the public deficit for the rest of the year.
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