19 | NOV | 2019
2020 budget: A glimmer of hope
Mexico allocates an important sum to welfare projects - Photo: Edgard Garrido/REUTERS

2020 budget: A glimmer of hope

Mexico City
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The payment of pensions, salaries, and public debt take over the budget

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On Sunday, the federal government presented the 2020 budget proposal, which is the first budget with President López Obrador's mark. A year ago, the budget was allocated by the previous administration, which limited the new government's action capacity.

It is expected that in contrast with 2019, this year, all the problems generated by the lack off resources or the delays in the allocation of money to operate the government will be over in 2020. This year, public research centers, the Sports Commission, and the health sector were some of the agencies that were allocated scarce resources.

For Mexican governments, the scope of action has been minimum for decades. A large part of the budget is allocated to areas that require thousands of millions and which have become a straitjacket. The payment of pensions, salaries, and public debt are only a few examples.

Therefore, the money the federal government is able to allocate to the programs that are supposed to spark the country's growth and development is scarce. Today, EL UNIVERSAL reveals that from the MXN $6.1 billion allocated for the 2020 budget, the government can only spend 18% of the budget on productive projects.

For this reason, another essential aspect is the uptake forecast of resources through taxes. This time, the strategy consists of giving more power to the Tax Administration Service and to implement the value-added tax (IVA) to digital platforms. Hopefully, the federal agency won't implement fiscal terrorism tactics and in the case of digital platforms, we hope that the tax doesn't translate into higher prices for the users.

The way in which the public resources are allocated makes the government's priorities evident. The President said that the most important issues in 2020 are security and provide aid to those sectors of the population who are in need. Public spending is rarely mentioned as one of the engines behind the economy. In the general criteria of the economic policies, the government forecasts growth between 1.5% and 2.5%; if the aim is to boost the economy, the assignation of resources for infrastructure projects should not be forgotten, besides this administration's staple projects.

The fiscal discipline shown to maintain balanced finance is a positive sign, especially since the public debt doubled during the Peña Nieto administration. Nevertheless, Mexico needs much more than fiscal discipline to improve the economy for millions of Mexicans; this will be one of the biggest challenges next year.


Mexico unveils its 2020 budget

Arturo Herrera said 60% of the budget is allocated to payments to local governments and pensions
Mexico unveils its 2020 budgetMexico unveils its 2020 budget



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