HR Ratings Confirms Mexico’s BBB+ Credit Rating, Outlook Stable

HR Ratings has reaffirmed Mexico’s credit rating at BBB+ and revised its outlook from negative to stable. The agency acknowledged the federal government’s fiscal consolidation efforts, noting adjustments in both current and investment spending alongside robust tax revenue performance.

“This development reflects prudent expenditure management, improved tax collection efficiency, efforts to combat tax evasion, and a commitment to medium-term fiscal sustainability,” the Ministry of Economy said. HR Ratings expects the trend toward lower deficits to continue over the medium and long term, despite external risks. The agency highlighted challenges such as rising financial costs and potential currency depreciations that could affect public debt, while noting that a favorable USMCA renegotiation could boost investment in strategic sectors and positively influence net debt through exchange rate effects.

The agency also emphasized that public finance stability has been supported by solid tax collection even without a fiscal reform. “A factor that has helped maintain stability in public finances is the strong level of tax revenue in the absence of a fiscal reform. Efforts to combat tax evasion, along with robust consumption dynamics, have allowed this revenue to support spending without increasing the debt burden,” HR Ratings stated. Federal support to PEMEX could further enhance the company’s investment capacity, generate positive financial balances, and help reduce debt levels over the medium term.

HR Ratings expects a more favorable economic environment in the coming years, with inflation gradually converging toward target levels, declining interest rates, and a strong financial system backed by high international reserves. Sustained fiscal consolidation, reflected in deficits below projections and improved tax collection, could strengthen debt management, while growth in productive investment may boost GDP and tax revenues, easing pressure on public finances.

However, the agency cautioned that fiscal deterioration or a prolonged economic slowdown could negatively impact Mexico’s rating. Lower tax revenues or higher spending pressures could undermine fiscal balances, requiring additional debt financing and potentially pushing net debt above 60% of GDP. Similarly, GDP growth near 1% over the medium to long term would weaken fiscal metrics such as deficits and net debt.