Mexico’s 1Q25 Tax Revenue Up 17.8%, Beats Forecasts

Mexico’s public finances remained resilient in the first quarter of 2025, with tax revenue increasing at one of the fastest rates in recent years, despite a deceleration in economic growth, according to the Ministry of Finance (SHCP).

Tax revenue rose by 17.8% in real terms year-over-year to MX$1.5 trillion from January to March, exceeding projections by MX$37.8 billion, said Finance Minister Edgar Amador. The growth was attributed to enhanced tax collection efficiency, reflecting the government’s ongoing fiscal reforms.

Adjusting for a calendar effect linked to corporate tax payments, the year-on-year increase was 9.3%, marking the second-highest since 2015.

Income tax (ISR) collections surged by 21.3% in real terms to MX$901.3 billion,buoyed by a strong labor market and rising wages. Value-added tax (IVA) revenue climbed 20.9% year-over-year to MX$400.4 billion, recording the highest quarterly growth on record, supported by robust domestic demand and a favorable exchange rate. Revenue from import taxes increased dramatically, growing by 50.5% in real terms to MX$42.3 billion, driven by expanded trade volumes and currency fluctuations.

Despite the solid tax performance, total budgetary revenue for the quarter reached MX$2.15 trillion, falling short of expectations by MX$63.2 billion. This gap was primarily attributed to a decline in oil revenue, which came in MX$100.3 billion below target at MX$227.5 billion.

During the release of the first-quarter Public Finance and Debt Report, Amador said the government does not foresee a recession for 2025, even though GDP grew only 0.2% in the first quarter. He emphasized that while analysts present varying economic forecasts, the Finance Ministry remains cautiously optimistic, projecting positive economic expansion for the year.

“We would have liked to see a more robust GDP figure, but we must remain responsible with our projections, as they guide many economic agents in Mexico and abroad,” Amador said.

Moody’s Analytics’ Latin America director Alfredo Coutiño offered a contrasting perspective, forecasting a 0.3% contraction in Mexico’s economy for the full year, including an expected decline in the second quarter. Coutiño attributed his cautious outlook to US protectionist policies, which, he warned, could exert greater pressure on the Mexican economy in the coming months.

The Finance Ministry reported that the government’s financial position remains stable, with actual spending below planned levels. The budget deficit was MX$121 billion at the end of March, well below the programmed MX$235 billion. Meanwhile, the primary surplus reached MX$182 billion, surpassing forecasts by MX$79 billion.

The public sector borrowing requirement — the broadest measure of public debt — totaled MX$17.66 trillion, or 49.2% of GDP, indicating manageable debt levels relative to the size of the economy.

Of the MX$136 billion budget allocation earmarked for the state oil company Pemex, MX$80 billion had been disbursed by the end of the quarter, according to Chief Economist Rodrigo Mariscal. 

The Ministry also noted that foreign direct investment (FDI) reached a preliminary total of MX$36.87 billion in 2024, the highest on record, signaling sustained investor confidence.

Mexico’s public finances remained resilient in the first quarter of 2025, with tax revenue increasing at one of the fastest rates in recent years, despite a deceleration in economic growth, according to the Ministry of Finance (SHCP).

Tax revenue rose by 17.8% in real terms year-over-year to MX$1.5 trillion from January to March, exceeding projections by MX$37.8 billion, said Finance Minister Edgar Amador. The growth was attributed to enhanced tax collection efficiency, reflecting the government’s ongoing fiscal reforms.

Adjusting for a calendar effect linked to corporate tax payments, the year-on-year increase was 9.3%, marking the second-highest since 2015.

Income tax (ISR) collections surged by 21.3% in real terms to MX$901.3 billion,buoyed by a strong labor market and rising wages. Value-added tax (IVA) revenue climbed 20.9% year-over-year to MX$400.4 billion, recording the highest quarterly growth on record, supported by robust domestic demand and a favorable exchange rate. Revenue from import taxes increased dramatically, growing by 50.5% in real terms to MX$42.3 billion, driven by expanded trade volumes and currency fluctuations.

Despite the solid tax performance, total budgetary revenue for the quarter reached MX$2.15 trillion, falling short of expectations by MX$63.2 billion. This gap was primarily attributed to a decline in oil revenue, which came in MX$100.3 billion below target at MX$227.5 billion.

During the release of the first-quarter Public Finance and Debt Report, Amador said the government does not foresee a recession for 2025, even though GDP grew only 0.2% in the first quarter. He emphasized that while analysts present varying economic forecasts, the Finance Ministry remains cautiously optimistic, projecting positive economic expansion for the year.

“We would have liked to see a more robust GDP figure, but we must remain responsible with our projections, as they guide many economic agents in Mexico and abroad,” Amador said.

Moody’s Analytics’ Latin America director Alfredo Coutiño offered a contrasting perspective, forecasting a 0.3% contraction in Mexico’s economy for the full year, including an expected decline in the second quarter. Coutiño attributed his cautious outlook to US protectionist policies, which, he warned, could exert greater pressure on the Mexican economy in the coming months.

The Finance Ministry reported that the government’s financial position remains stable, with actual spending below planned levels. The budget deficit was MX$121 billion at the end of March, well below the programmed MX$235 billion. Meanwhile, the primary surplus reached MX$182 billion, surpassing forecasts by MX$79 billion.

The public sector borrowing requirement — the broadest measure of public debt — totaled MX$17.66 trillion, or 49.2% of GDP, indicating manageable debt levels relative to the size of the economy.

Of the MX$136 billion budget allocation earmarked for the state oil company Pemex, MX$80 billion had been disbursed by the end of the quarter, according to Chief Economist Rodrigo Mariscal. 

The Ministry also noted that foreign direct investment (FDI) reached a preliminary total of MX$36.87 billion in 2024, the highest on record, signaling sustained investor confidence.