Mexico's public sector revenues witnessed a 4.5% real growth in April 2023 compared to last year. However, the overall revenues between January and April 2023 displayed a 3.1% real annual decrease, primarily attributed to the global decline in oil prices, which led to reduced oil revenues, according to the latest government data.
According to the Ministry of Finance and Public Credit (SHCP), during the first four months of 2023, petroleum revenues plummeted by 28.8% in real terms compared to the same period in 2022. This decline was counterbalanced by a substantial 104.5% real annual increase in the collection of fuel and diesel taxes (IEPS), as the government reduced the price subsidies on these commodities. This move aimed to offset the decline in oil revenues and mitigate the impact on public finances.
Income tax (ISR) also experienced a significant boost in April, with a 32.5% real annual increase, contributing to a 3.8% real annual rise in the overall income tax collection between January and April 2023. This positive performance was driven by a strengthening job market, rising wages and the extension of the deadline for corporate tax filings to April 1 by SAT.
The value-added tax (IVA), reflecting the growth of consumption and economic activity, registered a 4.9% real annual increase in April. This growth helped narrow the gap observed in previous months compared to the government's revenue targets.
In line with these developments, tax revenues, including income tax and value-added tax, surged by 25.4% in real terms in April 2023. This boost allowed the cumulative figure between January and April 2023 to surpass the same period in 2022 by 2.6%. However, non-tax revenues experienced a 3.9% real decrease during this period, primarily due to lower income and profits.
Despite declining revenues, the Mexican government demonstrated its commitment to stimulating economic growth by increasing physical investments. During the first four months of 2023, physical investments grew by 4.5% annually, signaling the government's dedication to infrastructure development and economic expansion.
In terms of government expenditure, total net expenditure increased by 3.8% in real terms in April 2023. However, the cumulative expenditure between January and April 2023 decreased by 2.1% in real terms. Notable expenditure increases were observed in the agricultural sector, energy, housing and social protection in April, with real annual increases of 90.3%, 20.1%, 14.5% and 8.7%, respectively.
The Mexican government's efforts to promote sustainable projects were acknowledged internationally. In April 2023, Mexico made history by issuing a US$2.9-billion bond aligned with the Sustainable Development Goals (SDG) for a 30-year term. Following international guidelines, this issuance aims to fund projects focused on environmental protection and social development.
Despite the challenges posed by falling oil prices, Mexico's government remains focused on maintaining fiscal discipline and promoting sustainable growth. The positive performance in tax collections and increased physical investments demonstrate the government's commitment to navigating through economic challenges while prioritizing long-term sustainability and development.