Mexico's budget deficit will be lower by 2026, as the economy grows.

The Finance Ministry said in its budget proposal on Monday that Mexico expects the budget deficit to drop to 4.10% in 2026, due to the expected growth of the GDP.

The government is under pressure to reduce the deficit. It now expects to close 2025 with 4.32%. At the same time, it has pledged to increase social programs and strengthen the finances of the heavily indebted oil company Pemex.

The government has also predicted that Latin America's 2nd largest economy will expand between 1,8% and 2,8%, an increase of up to 1.3 percentage points at both ends.

This is better than the IMF growth forecast of 1,4% in 2026 and the Bank of Mexico most recent growth forecast of just 1.1%.

The Bank of Mexico has set a target of 3.0% for the end of 2026, and the Ministry also forecasts that the inflation rate will reach this target by the third quarter of next year.

According to the document, Pemex will receive 263.5 billion pesos (14.14 billion dollars) in 2026 from the Mexican government to help it pay its debts and loan repayments.

The President of the United States, Claudia Sheinbaum, said that her government is not a democracy.

Consider imposing tariffs on China and other countries

The budget proposal, which has no trade agreement in place with Mexico, said that the 'General Import Tax of Mexico' will be reviewed by 2026 for the purpose of encouraging national development. However, it did not give any details.

The draft budget announced "healthy tax" as a way to discourage the consumption of unhealthy products. This would increase taxes on soft drinks, videogames, and nicotine sachets.

Sheinbaum and his allies have strong majorities in Congress.

(source: Reuters)