Analysts Expect Tough Year for Mexican States, Municipalities

Record transfers that states and municipalities will receive next year for shares and contributions, according to the 2023 Expenditure Budget of the Federation, which amount to MX$2.27 trillion (US$113.65 billion), will be hampered as Mexico’s 3-percent growth forecasted by the government will not be achieved, analysts warned.

“We believe that shares will grow, but not as much as the Expenditure Budget of the Federation estimates in 2023,” Matthew Walter, Assistant Vice President Analyst, Moody’s, told El Financiero . The Federation’s budget estimates a GDP growth of 3 percent and a drop in inflation to 3.2 percent, which contrasts with Moody’s forecast of 1 percent growth and 4.7 percent inflation, added Walter.

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SHCP Makes Prepayment to Contribute to Mexico’s External Debt

The Ministry of Finance and Public Credit (SHCP) carried out a debt reduction operation to partially pay its external debt with a prepayment to numerous multilateral organizations, as it follows on a previous 10-year benchmark reference operation from earlier this month to improve Mexico’s finances. The payment included two loans from the Inter-American Development Bank for an amount corresponding to MX$896 million (US$45 million).

The Year in Finance

After three years of pandemic, 2022 ends with high market volatility and a challenging perspective for the future. Central banks worldwide nearly simultaneously raised interest rates to respond to inflation throughout the year. Many countries face the “ghost” of a recession as global economic activity slows down. Despite efforts to shield the most vulnerable groups, the poorest still bear a disproportionate share of the burden of high food and energy prices.

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Latin American M&A Expected to Recover in 2023; IPOs May Take Longer

After Latin America saw a sharp drop in deals during 2022, bankers expect a slow recovery next year, led by mergers and acquisitions (M&A), reported Reuters. IPOs may take longer to resume, due to high global interest rates.

The volume of M&A deals in Latin America fell 35 percent this year to US$86 billion, according to Refinitiv. Bankers predict M&A volumes will grow up to 20 percent in the region in 2023 as Latin America becomes more relevant among emerging markets.

Mexican External Debt’s Interests Cut by Half: AMLO

President Andrés Manuel López Obrador said that his government managed to restructure Mexico’s external debt so the next administration pays half the interest.

“I am positive that I am going to leave my six-year term very well and leave my successor in a good position, unlike how Salinas left Zedillo,” said López Obrador. The president said he is acting responsibly so that in 2025, his successor does not face financial problems.