Videgaray thanked legislators for approving a “prudent, responsible and balanced” budget, but he said that as things stand Mexico could not totally cover education costs (especially further and higher education), nor health or infrastructure costs. The chamber of deputies approved public spending of M$3.95bn (US$312m) for 2013, 6.7% up on the 2012 budget. The budget predicts a fiscal deficit of 2% if investment of the state energy company Pemex is included; otherwise the deficit would be zero.
MEXICO | The cost of fuel subsidies. Petrol and diesel costs increased by 11 centavos (just under one US cent) a litre on 5 January. The increase is designed to reduce slightly the massive burden of fuel subsidies on the government. These totalled M$206bn (US$16.2bn) to November 2012. A UN human development report in 2011 maintained that fuel subsidies amounted to four times the total of government social programmes to combat poverty. The finance ministry argued that 43% of the subsidy benefits the 10% of richest Mexicans while the poorest 10% receive just 0.6% of it.
Miguel Messmacher Linartas, the deputy finance minister, maintained that the extra fuel costs would only produce a 0.01% increase in inflation. He also argued that even after these increases the cost of petrol and diesel would be between 10% and 17% higher in the US. He said that increases were essential to avoid a permanent deterioration of the country’s public finances.
President Enrique Peña Nieto’s predecessor Felipe Calderón lacked the political will to reduce fuel subsidies, despite his much-touted green credentials, but Peña Nieto cannot afford to subsidise fuel to this extent if he is going to implement the ambitious raft of proposals contained within his ‘Pact for Mexico’.
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