Politics Economy Country 2025-12-09T19:14:35+00:00

Political Battle Over Mexico's 2026 Budget

Mexico's opposition and government are negotiating the 2026 budget. Key issues include debt reduction, tax hikes, and electoral reform. Both sides aim to reach a deal by December 20 to avoid derailing the budget process.


Political Battle Over Mexico's 2026 Budget

The legal deadline for approval is the 20th of this month, with opposition lawmakers setting a limit of the 17th. Meanwhile, the Secretary of Government and the main interlocutor with the Front, Miguel Flores Serna, also seeks to resume negotiations once the opposition's request is formalized. The key axis remains a reduction in debt and a tax increase in exchange for Electoral Reform. Regarding the increase in the Payroll Tax, the opposition does not rule out its approval due to the dissolution of electoral locks for the 2027 elections, making another major unknown the relationship with the business sector. In Congress, they believe that although the proposal to increase taxes came from the Executive, the business sector has pressured the Legislature even more. This continues to annoy the opposition and pushes for a counter-proposal to the project presented by the Executive, with the aim of advancing negotiations and pressuring MC against the business sector. LPO learned that the opposition is preparing this counter-proposal for next week, tentatively December 15, leaving a two-day window for negotiations. At a health sector event, Governor Samuel García reiterated regarding the 2026 Budget: "We are waiting for the Congress's response." It has even been a topic of debate within the PRI and PAN. Meanwhile, the opposition also sees it as viable to approach the 4T to pass a legislative-style Budget Package and force MC into a single decision: approval or veto. The Front sees the 4T's caucus as very fragmented—meaning they could capture three to six votes—and believes that Morena resents great pressure from the National CEN to act detrimentally towards MC. However, the fragmentation within Morenism makes this scenario very complex: up to four legislators would not vote with the opposition, others demand more budget for allied municipalities, and the caucus in general has already privately signaled to the business sector to reject the ISN increase; the tax hike is something that the other caucuses are considering for now. In the Government Palace, they hope to get a counter-proposal soon to negotiate based on it, as if the discussion is delayed until next year, they would not be able to increase taxes due to the start of the 2026 fiscal year and its respective national measurements. In the Cantera Palace, they believe they have "made clear" the debt ceiling, offerings to bodies, mayors, and investment in flagship projects; now they are willing to negotiate these items. The opposition would implement the permanence of INFO NL, increases to bodies and mayor's offices, debt reduction, reallocation of resources, among other topics budgeted by the Executive.