The President of Mexico complained on Friday to the Moody’s rating service, after the Mexican government’s debt forecast was lowered to “negative”.
Moody’s said it had downgraded the government’s debt outlook from “stable” to “negative” following the recent approval. Laws in Mexico it can weaken the judiciary and balance sheets. He affirmed Mexico’s overall Baa2 credit rating, but said rising government debt posed a risk for Mexico.
He also mentioned the possibility of transferring more money from the government Debtor state oil company Pemex.
President Claudia Sheinbaum said rating agencies often have an “inherent bias” against the economic policies adopted by her party under former President Andrés Manuel López Obrador, who took office on December 1, 2018.
“Often these rating agencies aim to provide evaluations based on an economic model,” said Sheinbaum. “From 2018, the economic model in our country changed. These assessments often have this origin.”
Under López Obrador, who was Sheinbaum’s political mentor, the government began transferring large sums of money to the state oil company, started major construction projects and implemented cash-giving programs. That brought it federal budget deficits Around 6% of Mexico’s gross domestic product in 2024, which is expected to continue in 2025, albeit at a lower level.
And Sheinbaum continued that López Obrador will put all federal judges up for election in 2025 and 2026 to implement changes in the judiciary. The United States and business groups say it could undermine the independence of the judiciary and make it vulnerable to political pressure.
Critics say drug cartels can also fund judicial election campaigns and choose candidates.
“Deteriorating debt availability and rigid government spending make fiscal consolidation difficult, following this year’s widening government deficit,” Moody’s wrote, “regardless of economic pressures to deviate from a long low deficit trajectory.”
“At the same time, the revision of the constitution risks eroding the checks and balances of the country’s judicial system, which could have a negative impact on Mexico’s economic and fiscal strength,” he continued, adding that the changes “have the potential to materially change the checks and balances and the country’s business climate.”
Based on that and other factors, the Mexican peso has fallen to around 20.50 to $1 in recent days.
