2023 Infrastructure Expenditure Largest Registered in 12 YearsBy Fernando Mares | Wed, 10/05/2022 - 13:08
The federal government announced what looks to be the largest budget expenditure on infrastructure it has made since 2012. The funding will be focused on the development of roads, communication infrastructure, ports and airports. President López Obrador promoted his government’s focus on infrastructure development, although some argue that the government should focus on projects that attract more private investment instead.
The Economic Package 2023 revealed that the federal government plans to invest over US$50 billion in developing infrastructure, which according to the Minister of Finance, Rogelio Ramírez de la O, is the largest investment in infrastructure recorded since 2012, the first year that the Ministry of Finance (SHCP) registered the full figure due to changes in the public investment regulation. The ministry reported that the second-largest amount was allocated this year, with US$43 million approved.
According to Ramírez, the budget will be used to develop important projects, like the Mayan Train, the Interoceanic Corridor of the Isthmus of Tehuantepec, Agua Saludable Para la Laguna in Durango and Coahuila, the Santa María Dam in Sinaloa, the El Zapotillo Dam in Jalisco and the El Cuchillo II aqueduct in Nuevo Leon.
In addition, the federal government will develop railroad and road infrastructure, for example the Interurban Train Mexico-Toluca, as well as the highways of Mitla-Tehuantepec, Barranca Larga-Ventanilla, Real del Monte-Huasca, Portezuelo-Ciudad Valles and rural roads in Guerrero, Oaxaca and Sonora, among other states.
Energy-related projects are also contemplated in the federal budget, including the refurbishment of refineries. It also contemplates the installation of telecommunication towers for CFE Telecomunicaciones and the Internet para Todos project.
President López Obrador said these projects will be beneficial for the Mexican economy, but some experts argue that the budget could have been better implemented with a focus on projects that attract private investors. “Mexico needs infrastructure support to promote both foreign and local investment, the public investment could be better placed elsewhere,” said Alejandro Hernández, President, Mexican Institute of Finance Executives (IMEF).
Other institutions like the Center of Economic and Budgetary Research (CIEP) said that the investment falls short of what is required. According to CIEP, the to-be-approved budget would represent 3.8 percent of the national GDP, which is less than the four percent recommended by the Economic Commission for Latin America and the Caribbean (ECLAC). “To have a bigger impact on the economy, human development and closing gender gaps, the investment must be upped along with a strengthening of the government’s income and the allocation of resources to make public works financially sustainable,” CIEP stated.