2026 Investment Plan Shows Minimal Advances: México Evalúa

Despite a planned 9.7% budget increase for public works in 2026, Mexico’s physical investment continues to stagnate, showing only minimal progress against a backdrop of historical underinvestment, regional inequality, and limited execution capacity, according to México Evalúa’s report “Physical Investment in 2026: Minimal Advances in the Face of a Historic Lag.” 

The organization warns that the federal government’s spending strategy remains overly concentrated in energy projects, and far from the levels required to drive equitable and sustainable infrastructure development.

As a proportion of total public spending, physical investment will represent just 9.5% in 2026, up only 0.4% from 2025’s share, reads the report. For context, in 2014 investment accounted for 18% of budgetary outlays, nearly double the current share.

Record Decline and Fiscal Consolidation

Mexico’s public investment is set to record its steepest decline in modern history in 2025, as the federal government tightens spending to curb debt and achieve fiscal consolidation. The contraction underscores a major shift in budget priorities, with significant implications for infrastructure, education, and social development, MBN reports.

According to Jorge Cano, Coordinator of Public Spending and Accountability, México Evalúa, the cutback reflects the fiscal adjustment implemented between 2024 and 2025, coinciding with the federal transition of power. “Unfortunately, there were no significant cuts to current expenditure; the main adjustment came from public investment,” Cano tells El Sol de México.

Cano adds that PEMEX, education, and transportation were among the hardest-hit areas, limiting both economic development and the fulfillment of social rights due to reduced investment in essential infrastructure. He also highlights that Plan México is not supported by increased public investment, but instead assumes that the private sector will drive growth independently.

Persistent Under‐Execution and Concentration

One of the recurring problems is under‐execution of approved investment budgets. Between 2012 and 2024, federal investment spending fell short of its allotment eight times, averaging a 3% shortfall (about US$1.81 billion) relative to planned amounts. In 2023, for example, only 80% of the approved investment was actually expended, yielding a shortfall of US$13.53 billion.

Even those investments that are approved tend to be highly concentrated across a few sectors. According to the analysis, in 2026, Combustibles and Energy (mainly PEMEX and CFE) will receive about US$16.60 billion, or 32.1% of total investment. Meanwhile, Housing and Community Services (federal transfers to states and municipalities) will get nearly 30% of the total, while Transport (especially rail projects) is slated to receive just US$10.62 billion. Together, these three sectors will absorb about 83% of all federal infrastructure investment in 2026.

Particularly striking is the sharp cut in rail investment, which is planned to decline by 11% (a drop of US$0.92 billion) relative to 2025. Even flagship projects such as the Mexico–Queretaro and AIFA–Pachuca rail lines face steep reductions.

Imbalance by Subfunctions, Regions, and Institutions

• Of 73 subfunctions analyzed, 59 will see increases, but 96% of those gains are concentrated in just four subfunctions: regional development, public order, oil and gas, and health services

• Meanwhile, 42 subfunctions will receive less investment than in 2014

• On a per‐capita basis, disparities are stark: Tabasco will get over US$3,017.27 per person (driven largely by PEMEX operations), whereas states like Coahuila or Sinaloa may receive just US$107.83 per person

• Geographically, Mexico City, Tabasco, and Veracruz will absorb nearly 45% of the total federal investment

Institutionally, PEMEX remains the dominant recipient, with an increase of nearly MX$30 billion projected. State and municipal transfers (federal contributions) also benefit from an automatic legal mechanism (the Fiscal Coordination Law), reducing discretionary control.

Debt and Investment

A crucial metric in public finance is whether new debt is being used for productive investment. This is often referred to as the “Golden Rule,” which ideally holds that new borrowing is matched or exceeded by investment spending. For 2026, México Evalúa projects a ratio of just 0.61, meaning only 61% of the new debt would be tied to infrastructure investment. Though this is an improvement from 2025’s 0.53, it remains far from parity.

International comparisons paint a harsher picture: in 2023, public investment in Mexico accounted for 1.6% of GDP, placing it among the lowest levels in the OECD. Only Brazil (1.58%) and Costa Rica (1.44%) fared worse in that peer group.

By contrast, countries like Estonia, Romania, and Hungary allocate over 5% of GDP to public investment, multiple points above Mexico’s share.

Mexico Evalúa’s Recommendations

México Evalúa suggests that the plan for 2026 embodies only minimal progress and is deeply constrained by historical underinvestment, persistent under-execution, and sectoral concentration. The modest aggregate increase cannot compensate for the long-standing neglect of critical sectors such as transportation, science and technology, and equitable regional development.

To alter this trajectory, the organization makes several recommendations, including:

1. Strengthening execution discipline and reducing chronic under-execution of investment budgets

2. Broadening investment across sectors, avoiding excessive concentration in hydrocarbons and transfers while expanding funding to infrastructure, education, health, and regional connectivity

3. Ensuring debt aligns with productive investment, moving closer to a Golden Rule ratio of 1

4. Balancing spatial distribution by allocating resources more equitably across states, prioritizing historically underserved regions

5. Reviving public-private partnerships (PPPs)

Only by addressing both the quantity and quality of public investment can Mexico hope to overcome infrastructure deficits, reduce inequality, and foster inclusive development, says México Evalúa.