IMF Urges Mexico to Accelerate Debt Reduction and Maintain Fiscal Discipline
The International Monetary Fund (IMF) has released its annual review of Mexico, urging the government to implement faster deficit cuts to put public debt on a downward trajectory. The IMF staff projects Mexico's gross public-sector debt to reach 62.1% of GDP in 2026 and 62.9% in 2027, an increase from 52.7% in 2023. While acknowledging Mexico's ongoing fiscal consolidation efforts, the IMF believes greater efforts are needed to strengthen public finances. The fund also advised Banxico, Mexico's central bank, to maintain a moderately restrictive monetary policy stance and to clarify that the variability band around its 3% inflation target is not a tolerance range. Despite these concerns, the IMF has upgraded its growth forecast for Mexico, now expecting 1.5% growth in 2026 and 1.8% in 2027, an increase from its July projection of 1.2% for 2026. The banking system is deemed sound with strong capital and low delinquency, and the flexible peso is seen as a shock absorber.
