Mexico Skirts Golden Rule, Invests 70 Cents per Peso in 1H25

Mexico’s federal government has once again failed to comply with the so-called “golden rule of debt,” which requires physical investment to exceed borrowing, according to a report by policy group México Evalúa.

In the first half of 2025, just 70 cents were invested in infrastructure for every peso of debt incurred. Public investment totaled MX$399.71 billion, a 30.4% drop from the same period last year, while Public Sector Borrowing Requirements reached MX$567.6 billion, down 32.9% year-on-year.

On average, borrowing in recent years has been 1.4 times greater than physical investment, México Evalúa noted, adding that 2018 was the only year when investment exceeded debt. This imbalance has persisted since 2019, despite constitutional provisions requiring debt financing to fund projects that directly boost public revenue.

In 2024, infrastructure spending increased during the administration changeover, pushing the fiscal deficit to 5.7% of GDP. In the first half of that year, 68 cents were invested per peso of debt.

Finance Ministry data showed physical investment in the first six months of 2025 fell to its lowest level for a comparable period, partly due to budget cuts this year. Officials attributed the sharp decline to unusually high spending in 2024.

As of June, the Historical Balance of Public Sector Borrowing Requirements, the broadest measure of public debt, stood at MX$17.8 trillion, up 6.8% from a year earlier. Of that, MX$13.5 trillion was domestic debt and MX$4.4 trillion was external debt. The debt-to-GDP ratio was 49.5%, down from 51.3% at the end of 2024, helped by favorable exchange rate movements.

Finance Ministry projections in the 2025 budget estimate public debt will reach MX$18.59 trillion by year-end, equal to 51.4% of GDP, keeping the fiscal position on a stable trajectory.