The agency Moody's changed Mexico's rating from "stable" to "negative." This action is based on concerns about the weakening of the country's policies and institutional environment, which could harm fiscal and economic results, according to the agency.
Moody's explained that the increase in the public deficit this year, which exceeded 5% of GDP, along with the reduction in debt affordability and rigidity in public spending, complicate fiscal consolidation. Although the government has committed to reducing the deficit in the coming years, Moody's points out that the reforms implemented or announced could limit this objective, especially the recent reform in the Judiciary.
The agency warns that this reform has the potential to alter checks and balances, as well as the business environment in Mexico. Furthermore, Moody's emphasizes that the quality of institutions in Mexico is already low compared to other evaluated countries. Greater deterioration in the regulatory framework and the independence of the judicial system could complicate the government's ability to address credit challenges.
Moody's projects that the fiscal deficit will gradually decrease in the coming years but estimates that Mexico's public debt will exceed 45% of GDP in 2025 and could reach 50% in 2027-2028 if deeper consolidation measures are not implemented. Additionally, it is noted that there is a greater possibility that the contingent liabilities of Petróleos Mexicanos will impact government finances.
Despite this modification, Moody's maintains Mexico's rating at "Baa2," recognizing the economic strength of the country backed by the diversity of its economy and prudent fiscal and monetary policies. The agency also points out an additional risk regarding the potential revision of the USMCA in 2026, especially if the United States modifies trade policies that could continuously limit Mexican exports.
