Overview
- Government debt rose to nearly 50% of GDP in 2025 from 40% in 2023 following large transfers to Pemex.
- The fiscal deficit narrowed only to 4.9% of GDP in 2025 versus Moody’s 4.1% projection due to rigid spending and Pemex support.
- The 2026 budget sets aside resources for Pemex debt service, with Moody’s projecting average negative free cash flow of about $7 billion annually in 2026–2029.
- Moody’s flags potential additional government transfers to meet maturities on last year’s precapitalized notes and a Pemex support trust.
- Growth slowed to an estimated 0.5% in 2025, while investment weakened under domestic reform uncertainty and the ongoing USMCA review despite new policy programs facing execution risk.