Mexico’s Ministry of Finance and Public Credit (SHCP) reported that the financial cost of public debt stood at 608,934 million pesos at the end of July, which grew by 25.9% compared to the same period in 2022.
“The increase in interest payments on the debt occurs in a context of high interest rates globally,” the SHCP said.
At the same time, it was reported that the financial cost of the debt was 1.2% below schedule at 7.4 billion pesos.
“Now that the interest rate of the Bank of Mexico (Banxico) has stabilized, it has had three years without changes, and the annual growth of the financial cost begins to moderate,” said James Salazar Salinas, deputy director of economic analysis at CIBanco.
At the end of May, spending on financial costs grew 49% year-on-year.
“This year, the federal government will spend more than 1 trillion pesos in interest on the debt, and although it is an issue already contemplated in the budget, it shows how debt service has become a burden because those resources could be used for public infrastructure. The opportunity cost is very high,” he said.
At the beginning of August, the Bank of Mexico (Banxico) maintained for the third consecutive time the interest rate at 11.25%, and specialists believe that it will remain at that level for the remainder of 2023.
Inflation slowed in Mexico in the first half of August for the seventh consecutive fortnight, to 4.67% at an annual rate, its lowest level since March 2021, while core inflation stood at 6.21%.
