Mexico's 2027 Budget Shields Welfare and Pemex While Promising No New Taxes
Sheinbaum's government plans 10.6 trillion pesos of spending and a smaller deficit, relying on tax enforcement and 1.5-2.5% growth to keep investors and rating agencies on side.
Mexico's government has sent Congress a 2027 budget that promises to protect social programmes and public investment while trimming the deficit, all without introducing new taxes. Finance Secretary Édgar Amador Zamora delivered the economic package to the Chamber of Deputies on 8 September.
The plan foresees total spending of about 10.6 trillion pesos against budgeted revenue of 9.16 trillion pesos, leaving a deficit of around 1.36 trillion pesos. It is President Claudia Sheinbaum's attempt to show that Mexico can keep its welfare commitments and still convince investors that its public finances are under control.
What is in the package
Revenue is expected to rise 3.9% in real terms from this year's estimated outturn. The increase rests on non-oil revenue, projected to grow 6.6%, while oil income is forecast to fall by more than 14%. Rather than raising tax rates, the Finance Ministry is relying on tougher enforcement against evasion and the shell companies used to issue fake invoices.
On spending, the priorities are familiar:
- Social programmes receive just over 1 trillion pesos, led by pensions for older people at about 543 billion pesos and education scholarships.
- Public investment of around 560 billion pesos, with large sums for passenger railways and for the state oil company, Pemex.
- Continued subsidies on petrol and diesel to hold down fuel prices.
- More money for social housing, part of the government's plan to build 1.8 million affordable homes.
The budget assumes economic growth of 1.5% to 2.5% next year, inflation of 3% by the end of 2027 and an oil price of about $61 a barrel for Mexican crude.
The context: a tight squeeze
Mexico's public finances have been under pressure. The previous government left a large deficit, economic growth has been weak, and Pemex, one of the most indebted oil companies in the world, continues to require support from the Treasury. At the same time, Sheinbaum has pledged to maintain and expand the welfare programmes that are the foundation of her party's popularity.
That is why the absence of new taxes matters politically. The government is trying to square its commitments through efficiency and enforcement, a strategy that depends heavily on growth and on collecting more from existing taxes.
Why it matters
The budget is being watched closely by credit rating agencies and investors. Mexico's investment-grade rating keeps its borrowing costs down, and a loss of confidence in its fiscal path would be expensive. Analysts see the 2027 package as a test of whether the government's promise of gradual deficit reduction is credible.
The Finance Ministry says its aim is to keep public finances "sustainable" through a gradual reduction in the deficit, stronger revenue and careful debt management. The plan's weak point is its dependence on assumptions: growth at the top of the forecast range would make the numbers work comfortably, while the expected fall in oil income leaves little margin for error.
What comes next
Congress now has to approve the plan. Both chambers must pass the revenue law, and the Chamber of Deputies must approve the spending budget by 15 November. With the governing Morena party and its allies holding large majorities, the broad outlines are expected to survive, though individual spending lines are likely to be fought over.
The bigger test comes after approval. If growth falls short or oil revenue drops further, the government will face a choice between cutting spending it has promised to protect and missing the deficit targets it has promised investors. The 2027 budget postpones that choice; it does not remove it.
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