Abstract
Strong fundamentals and a policy track record helped Mexico to withstand the fallout from the global crisis and aided recovery. The policy challenges have to take due account of significant global uncertainty, employment generation, and long-term fiscal reforms. The economy will benefit from rebuilding fiscal policy buffers over the medium-term. The flexible exchange rate regime has helped Mexico. The long-term challenges include declining oil reserves relative to GDP and population aging. Advancing structural reforms to increase productivity and promote investment will help in increasing the growth potential.
FISCAL DSA
Mexico’s public debt is moderate and will remain stable over the medium term under the baseline scenario, at around 43 percent of GDP. Standard DSA shocks would increase public debt by generally less than 10 percentage points of GDP over the medium term. But Mexico’s balanced-budget framework represents a strong fiscal anchor against the materialization of such scenarios.
Mexico: Gross Public Debt Sustainability: Bound Tests 1/
(Gross public debt in percent of GDP)
Citation: IMF Staff Country Reports 2011, 250; 10.5089/9781462325429.002.A002
Sources: International Monetary Fund, country desk data, and staffestimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primarybalance.3/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2010, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).Mexico: Gross Public Debt Sustainability: Bound Tests 1/
(Gross public debt in percent of GDP)
Citation: IMF Staff Country Reports 2011, 250; 10.5089/9781462325429.002.A002
Sources: International Monetary Fund, country desk data, and staffestimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primarybalance.3/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2010, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).Mexico: Gross Public Debt Sustainability: Bound Tests 1/
(Gross public debt in percent of GDP)
Citation: IMF Staff Country Reports 2011, 250; 10.5089/9781462325429.002.A002
Sources: International Monetary Fund, country desk data, and staffestimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and primarybalance.3/ One-time real depreciation of 30 percent and 10 percent of GDP shock to contingent liabilities occur in 2010, with real depreciation defined as nominal depreciation (measured by percentage fall in dollar value of local currency) minus domestic inflation (based on GDP deflator).Mexico: Gross Public Sector Debt Sustainability Framework, 2002-2016
(In percent of GDP, unless otherwise indicated)
Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.
Derived as [(r - p(1+g) - g + ae(1+r)]/(1+g + p+gp)) times previous period debt ratio, with r = interest rate; p = growth rate of GDP deflator; g = real GDP growth rate; a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
The real interest rate contribution is derived from the denominator in footnote 2/ as r - π(1+g) and the real growth contribution as -g.
The exchange rate contribution is derived from the numerator in footnote 2/ as ae(1+r).
For projections, this line includes exchange rate changes.
Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.
Derived as nominal interest expenditure divided by previous period debt stock.
Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year. 7/ External debt is converted in pesos using end of period exchange rates.
Mexico: Gross Public Sector Debt Sustainability Framework, 2002-2016
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Debt-stabilizing | ||||
| primary | |||||||||||||||||||
| balance 9/ | |||||||||||||||||||
| Baseline: Gross public sector debt 1/ | 45.7 | 45.6 | 41.4 | 39.8 | 38.4 | 37.8 | 43.1 | 44.7 | 42.9 | 42.5 | 42.5 | 42.7 | 42.7 | 42.5 | 42.4 | −0.5 | |||
| o/w foreign-currency denominated 7/ | 15.5 | 16.0 | 14.6 | 12.8 | 10.2 | 10.2 | 12.8 | 12.1 | 10.0 | 9.2 | 8.5 | 8.0 | 7.6 | 7.1 | 6.7 | ||||
| Change in gross public sector debt | 3.7 | −0.1 | −4.2 | −1.6 | −1.5 | −0.5 | 5.3 | 1.6 | −1.8 | −0.4 | 0.0 | 0.2 | 0.0 | −0.2 | −0.1 | ||||
| Identified debt-creating flows (4+7+12) | 3.6 | −1.5 | −5.4 | −2.5 | −3.2 | −2.3 | 0.6 | 3.8 | −0.1 | −1.0 | −0.9 | −0.6 | −0.8 | −0.9 | −0.8 | ||||
| Primary deficit | 0.1 | −0.9 | −1.6 | −1.5 | −1.5 | −1.1 | −1.3 | 2.2 | 1.8 | 0.6 | 0.0 | −0.1 | −0.2 | −0.3 | −0.5 | ||||
| Revenue and grants | 19.7 | 20.6 | 19.3 | 20.8 | 21.4 | 21.2 | 22.8 | 22.2 | 22.2 | 21.4 | 21.8 | 21.3 | 20.7 | 20.4 | 20.1 | ||||
| Primary (noninterest) expenditure | 19.8 | 19.7 | 17.7 | 19.3 | 19.9 | 20.1 | 21.5 | 24.4 | 24.0 | 22.0 | 21.8 | 21.2 | 20.5 | 20.0 | 19.6 | ||||
| Automatic debt dynamics 2/ | 4.1 | 0.0 | −2.4 | −0.7 | −1.4 | −0.6 | 2.6 | 3.1 | −1.7 | −1.1 | −0.4 | −0.1 | −0.1 | −0.1 | 0.2 | ||||
| Contribution from interest rate/growth differential 3/ | 2.3 | −1.4 | −2.5 | −0.1 | −1.5 | −0.5 | 0.1 | 3.6 | −1.7 | −1.1 | −0.4 | −0.1 | −0.1 | −0.1 | 0.2 | ||||
| Of which contribution from real interest rate | 2.4 | −0.8 | −0.9 | 1.1 | 0.3 | 0.6 | 0.5 | 0.9 | 0.5 | 0.6 | 1.2 | 1.3 | 1.2 | 1.2 | 1.4 | ||||
| Of which contribution from real GDP growth | 0.0 | −0.6 | −1.6 | −1.2 | −1.8 | −1.1 | −0.4 | 2.7 | −2.2 | −1.7 | −1.6 | −1.3 | −1.3 | −1.3 | −1.3 | ||||
| Contribution from exchange rate depreciation 4/ | 1.8 | 1.3 | 0.0 | −0.6 | 0.1 | 0.0 | 2.5 | −0.5 | … | … | … | … | … | … | … | ||||
| Other identified debt-creating flows | −0.6 | −0.6 | −1.3 | −0.2 | −0.3 | −0.6 | −0.7 | −1.5 | −0.2 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | ||||
| Privatization receipts (negative) | −0.6 | −0.6 | −1.3 | −0.2 | −0.3 | −0.6 | −0.7 | −1.5 | −0.2 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | ||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Residual, including asset changes (2-3) 5/ | 0.1 | 1.4 | 1.2 | 0.9 | 1.8 | 1.8 | 4.7 | −2.2 | −1.7 | 0.6 | 1.0 | 0.8 | 0.8 | 0.7 | 0.7 | ||||
| Gross public sector debt-to-revenue ratio 1/ | 231.7 | 221.7 | 214.6 | 191.3 | 179.1 | 178.4 | 189.3 | 201.6 | 193.1 | 199.0 | 195.0 | 200.9 | 206.0 | 208.5 | 210.8 | ||||
| Gross financing need 6/ | 11.0 | 10.9 | 8.8 | 10.4 | 8.4 | 8.2 | 10.9 | 15.4 | 13.1 | 11.9 | 10.4 | 10.4 | 10.1 | 9.9 | 9.6 | ||||
| in billions of U.S. dollars | 77.4 | 76.4 | 67.1 | 88.1 | 79.7 | 84.7 | 119.4 | 135.5 | 135.2 | 140.2 | 128.8 | 135.6 | 139.3 | 143.1 | 146.6 | ||||
| Scenario with key variables at their historical averages 7/ | 42.6 | 42.6 | 42.4 | 42.3 | 42.1 | 41.9 | −0.5 | ||||||||||||
| Scenario with no policy change (constant primary balance) in 2010-2015 | 43.3 | 45.0 | 47.1 | 49.0 | 50.9 | 53.1de | −0.5 | ||||||||||||
| Key Macroeconomic and Fiscal Assumptions Underlying Baseline | stabilization | ||||||||||||||||||
| Real GDP growth (in percent) | 0.1 | 1.4 | 4.0 | 3.2 | 5.2 | 3.2 | 1.2 | −6.2 | 5.4 | 4.4 | 4.1 | 3.3 | 3.3 | 3.3 | 3.2 | ||||
| Average nominal interest rate on public debt (in percent) 8/ | 8.4 | 7.6 | 7.3 | 7.6 | 7.8 | 7.5 | 7.6 | 5.9 | 5.8 | 6.4 | 6.2 | 6.3 | 6.4 | 6.5 | 6.6 | ||||
| Average real interest rate (nominal rate minus change in GDP deflator, in percent) | 5.8 | −1.8 | −1.8 | 3.1 | 1.1 | 1.9 | 1.4 | 1.7 | 1.5 | 1.7 | 3.2 | 3.3 | 3.2 | 3.2 | 3.7 | ||||
| Nominal appreciation (increase in US dollar value of local currency, in percent) | −11.3 | −8.2 | −0.3 | 4.5 | −0.9 | 0.1 | −19.7 | 3.7 | … | … | … | … | … | … | … | ||||
| Inflation rate (GDP deflator, in percent) | 2.6 | 9.4 | 9.1 | 4.6 | 6.7 | 5.6 | 6.2 | 4.1 | 4.4 | 4.7 | 3.0 | 3.0 | 3.2 | 3.3 | 2.9 | ||||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 13.0 | 0.6 | −6.4 | 12.3 | 8.6 | 4.4 | 8.2 | 6.3 | 3.7 | −4.4 | 3.5 | 0.3 | 0.0 | 0.9 | 1.1 | ||||
| Primary deficit | 0.1 | −0.9 | −1.6 | −1.5 | −1.5 | −1.1 | −1.3 | 2.2 | 1.8 | 0.6 | 0.0 | −0.1 | −0.2 | −0.3 | −0.5 | ||||
Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.
Derived as [(r - p(1+g) - g + ae(1+r)]/(1+g + p+gp)) times previous period debt ratio, with r = interest rate; p = growth rate of GDP deflator; g = real GDP growth rate; a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
The real interest rate contribution is derived from the denominator in footnote 2/ as r - π(1+g) and the real growth contribution as -g.
The exchange rate contribution is derived from the numerator in footnote 2/ as ae(1+r).
For projections, this line includes exchange rate changes.
Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.
Derived as nominal interest expenditure divided by previous period debt stock.
Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year. 7/ External debt is converted in pesos using end of period exchange rates.
Mexico: Gross Public Sector Debt Sustainability Framework, 2002-2016
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2002 | 2003 | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Debt-stabilizing | ||||
| primary | |||||||||||||||||||
| balance 9/ | |||||||||||||||||||
| Baseline: Gross public sector debt 1/ | 45.7 | 45.6 | 41.4 | 39.8 | 38.4 | 37.8 | 43.1 | 44.7 | 42.9 | 42.5 | 42.5 | 42.7 | 42.7 | 42.5 | 42.4 | −0.5 | |||
| o/w foreign-currency denominated 7/ | 15.5 | 16.0 | 14.6 | 12.8 | 10.2 | 10.2 | 12.8 | 12.1 | 10.0 | 9.2 | 8.5 | 8.0 | 7.6 | 7.1 | 6.7 | ||||
| Change in gross public sector debt | 3.7 | −0.1 | −4.2 | −1.6 | −1.5 | −0.5 | 5.3 | 1.6 | −1.8 | −0.4 | 0.0 | 0.2 | 0.0 | −0.2 | −0.1 | ||||
| Identified debt-creating flows (4+7+12) | 3.6 | −1.5 | −5.4 | −2.5 | −3.2 | −2.3 | 0.6 | 3.8 | −0.1 | −1.0 | −0.9 | −0.6 | −0.8 | −0.9 | −0.8 | ||||
| Primary deficit | 0.1 | −0.9 | −1.6 | −1.5 | −1.5 | −1.1 | −1.3 | 2.2 | 1.8 | 0.6 | 0.0 | −0.1 | −0.2 | −0.3 | −0.5 | ||||
| Revenue and grants | 19.7 | 20.6 | 19.3 | 20.8 | 21.4 | 21.2 | 22.8 | 22.2 | 22.2 | 21.4 | 21.8 | 21.3 | 20.7 | 20.4 | 20.1 | ||||
| Primary (noninterest) expenditure | 19.8 | 19.7 | 17.7 | 19.3 | 19.9 | 20.1 | 21.5 | 24.4 | 24.0 | 22.0 | 21.8 | 21.2 | 20.5 | 20.0 | 19.6 | ||||
| Automatic debt dynamics 2/ | 4.1 | 0.0 | −2.4 | −0.7 | −1.4 | −0.6 | 2.6 | 3.1 | −1.7 | −1.1 | −0.4 | −0.1 | −0.1 | −0.1 | 0.2 | ||||
| Contribution from interest rate/growth differential 3/ | 2.3 | −1.4 | −2.5 | −0.1 | −1.5 | −0.5 | 0.1 | 3.6 | −1.7 | −1.1 | −0.4 | −0.1 | −0.1 | −0.1 | 0.2 | ||||
| Of which contribution from real interest rate | 2.4 | −0.8 | −0.9 | 1.1 | 0.3 | 0.6 | 0.5 | 0.9 | 0.5 | 0.6 | 1.2 | 1.3 | 1.2 | 1.2 | 1.4 | ||||
| Of which contribution from real GDP growth | 0.0 | −0.6 | −1.6 | −1.2 | −1.8 | −1.1 | −0.4 | 2.7 | −2.2 | −1.7 | −1.6 | −1.3 | −1.3 | −1.3 | −1.3 | ||||
| Contribution from exchange rate depreciation 4/ | 1.8 | 1.3 | 0.0 | −0.6 | 0.1 | 0.0 | 2.5 | −0.5 | … | … | … | … | … | … | … | ||||
| Other identified debt-creating flows | −0.6 | −0.6 | −1.3 | −0.2 | −0.3 | −0.6 | −0.7 | −1.5 | −0.2 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | ||||
| Privatization receipts (negative) | −0.6 | −0.6 | −1.3 | −0.2 | −0.3 | −0.6 | −0.7 | −1.5 | −0.2 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | −0.5 | ||||
| Recognition of implicit or contingent liabilities | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Other (specify, e.g. bank recapitalization) | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | ||||
| Residual, including asset changes (2-3) 5/ | 0.1 | 1.4 | 1.2 | 0.9 | 1.8 | 1.8 | 4.7 | −2.2 | −1.7 | 0.6 | 1.0 | 0.8 | 0.8 | 0.7 | 0.7 | ||||
| Gross public sector debt-to-revenue ratio 1/ | 231.7 | 221.7 | 214.6 | 191.3 | 179.1 | 178.4 | 189.3 | 201.6 | 193.1 | 199.0 | 195.0 | 200.9 | 206.0 | 208.5 | 210.8 | ||||
| Gross financing need 6/ | 11.0 | 10.9 | 8.8 | 10.4 | 8.4 | 8.2 | 10.9 | 15.4 | 13.1 | 11.9 | 10.4 | 10.4 | 10.1 | 9.9 | 9.6 | ||||
| in billions of U.S. dollars | 77.4 | 76.4 | 67.1 | 88.1 | 79.7 | 84.7 | 119.4 | 135.5 | 135.2 | 140.2 | 128.8 | 135.6 | 139.3 | 143.1 | 146.6 | ||||
| Scenario with key variables at their historical averages 7/ | 42.6 | 42.6 | 42.4 | 42.3 | 42.1 | 41.9 | −0.5 | ||||||||||||
| Scenario with no policy change (constant primary balance) in 2010-2015 | 43.3 | 45.0 | 47.1 | 49.0 | 50.9 | 53.1de | −0.5 | ||||||||||||
| Key Macroeconomic and Fiscal Assumptions Underlying Baseline | stabilization | ||||||||||||||||||
| Real GDP growth (in percent) | 0.1 | 1.4 | 4.0 | 3.2 | 5.2 | 3.2 | 1.2 | −6.2 | 5.4 | 4.4 | 4.1 | 3.3 | 3.3 | 3.3 | 3.2 | ||||
| Average nominal interest rate on public debt (in percent) 8/ | 8.4 | 7.6 | 7.3 | 7.6 | 7.8 | 7.5 | 7.6 | 5.9 | 5.8 | 6.4 | 6.2 | 6.3 | 6.4 | 6.5 | 6.6 | ||||
| Average real interest rate (nominal rate minus change in GDP deflator, in percent) | 5.8 | −1.8 | −1.8 | 3.1 | 1.1 | 1.9 | 1.4 | 1.7 | 1.5 | 1.7 | 3.2 | 3.3 | 3.2 | 3.2 | 3.7 | ||||
| Nominal appreciation (increase in US dollar value of local currency, in percent) | −11.3 | −8.2 | −0.3 | 4.5 | −0.9 | 0.1 | −19.7 | 3.7 | … | … | … | … | … | … | … | ||||
| Inflation rate (GDP deflator, in percent) | 2.6 | 9.4 | 9.1 | 4.6 | 6.7 | 5.6 | 6.2 | 4.1 | 4.4 | 4.7 | 3.0 | 3.0 | 3.2 | 3.3 | 2.9 | ||||
| Growth of real primary spending (deflated by GDP deflator, in percent) | 13.0 | 0.6 | −6.4 | 12.3 | 8.6 | 4.4 | 8.2 | 6.3 | 3.7 | −4.4 | 3.5 | 0.3 | 0.0 | 0.9 | 1.1 | ||||
| Primary deficit | 0.1 | −0.9 | −1.6 | −1.5 | −1.5 | −1.1 | −1.3 | 2.2 | 1.8 | 0.6 | 0.0 | −0.1 | −0.2 | −0.3 | −0.5 | ||||
Indicate coverage of public sector, e.g., general government or nonfinancial public sector. Also whether net or gross debt is used.
Derived as [(r - p(1+g) - g + ae(1+r)]/(1+g + p+gp)) times previous period debt ratio, with r = interest rate; p = growth rate of GDP deflator; g = real GDP growth rate; a = share of foreign-currency denominated debt; and e = nominal exchange rate depreciation (measured by increase in local currency value of U.S. dollar).
The real interest rate contribution is derived from the denominator in footnote 2/ as r - π(1+g) and the real growth contribution as -g.
The exchange rate contribution is derived from the numerator in footnote 2/ as ae(1+r).
For projections, this line includes exchange rate changes.
Defined as public sector deficit, plus amortization of medium and long-term public sector debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; real interest rate; and primary balance in percent of GDP.
Derived as nominal interest expenditure divided by previous period debt stock.
Assumes that key variables (real GDP growth, real interest rate, and other identified debt-creating flows) remain at the level of the last projection year. 7/ External debt is converted in pesos using end of period exchange rates.
Mexico: External Debt Sustainability Framework, 2006-16
(In percent of GDP, unless otherwise indicated)
Derived as [r - g - r(1 + g) + ea(1 + r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms, g = e = nominal appreciation (increase in dollar value of domestic currency), and a = share of domestic-currency denominated debt in total external debt.
The contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1 + r)]/(1 + g + r+gr) times previous period debt stock. r increases with an appreciating domestic currency (e > 0) and
For projection, line includes the impact of price and exchange rate changes.
Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
Goods and nonfactor services.
Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain of the last projection year.
Mexico: External Debt Sustainability Framework, 2006-16
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Debt-stabilizing | ||||
| non-interest | |||||||||||||||
| current account 7/ | |||||||||||||||
| Baseline: External debt | 17.8 | 18.7 | 18.4 | 21.8 | 23.1 | 22.1 | 21.9 | 22.0 | 22.0 | 21.9 | 21.8 | −1.6 | |||
| Change in external debt | −2.7 | 0.9 | −0.3 | 3.4 | 1.3 | −1.0 | −0.2 | 0.1 | 0.1 | −0.1 | −0.1 | ||||
| Identified external debt-creating flows (4+8+9) | −3.5 | −2.8 | −0.9 | 3.4 | −3.7 | −1.9 | −1.8 | −1.5 | −1.4 | −1.4 | −1.4 | ||||
| Current account deficit, excluding interest payments | −1.0 | −0.6 | 0.2 | −0.6 | −0.7 | 0.0 | 0.1 | 0.0 | 0.0 | −0.1 | −0.2 | ||||
| Deficit in balance of goods and services | 1.3 | 1.6 | 2.2 | 1.5 | 1.3 | 1.5 | 1.7 | 1.8 | 1.9 | 2.0 | 1.9 | ||||
| Exports | 27.9 | 27.9 | 28.2 | 27.7 | 30.3 | 32.1 | 32.8 | 33.5 | 34.3 | 35.4 | 36.6 | ||||
| Imports | 29.2 | 29.5 | 30.4 | 29.2 | 31.6 | 33.7 | 34.5 | 35.3 | 36.2 | 37.3 | 38.5 | ||||
| Net non-debt creating capital inflows (negative) | −1.8 | −2.3 | −1.3 | −1.8 | −1.1 | −2.1 | −2.1 | −2.1 | −2.1 | −2.2 | −2.2 | ||||
| Automatic debt dynamics 1/ | −0.7 | 0.0 | 0.3 | 5.8 | −2.0 | 0.3 | 0.3 | 0.6 | 0.8 | 0.9 | 1.1 | ||||
| Contribution from nominal interest rate | 1.5 | 1.4 | 1.3 | 1.3 | 1.2 | 1.2 | 1.1 | 1.3 | 1.4 | 1.6 | 1.7 | ||||
| Contribution from real GDP growth | −0.9 | −0.5 | −0.3 | 1.4 | −0.9 | −0.9 | −0.9 | −0.7 | −0.7 | −0.7 | −0.7 | ||||
| Contribution from price and exchange rate changes 2/ | −1.3 | −0.9 | −0.8 | 3.1 | −2.3 | … | … | … | … | … | … | ||||
| Residual, incl. change in gross foreign assets (2-3) 3/ | 0.8 | 3.7 | 0.6 | 0.0 | 5.1 | 0.8 | 1.6 | 1.6 | 1.5 | 1.3 | 1.3 | ||||
| External debt-to-exports ratio (in percent) | 63.6 | 66.8 | 65.1 | 78.8 | 76.2 | 68.7 | 66.7 | 65.6 | 64.2 | 62.1 | 59.6 | ||||
| Gross external financing need (in billions of US dollars) 4/ | 72.0 | 61.4 | 73.4 | 61.7 | 57.8 | 77.3 | 85.0 | 92.2 | 100.4 | 111.9 | 118.3 | ||||
| in percent of GDP | 7.6 | 5.9 | 6.7 | 7.0 | 5.6 | 6.6 | 6.8 | 7.1 | 7.3 | 7.7 | 7.8 | ||||
| Scenario with key variables at their historical averages 5/ | 22.1 | 22.2 | 22.2 | 22.3 | 22.3 | 22.1 | −1.5 | ||||||||
| Key Macroeconomic Assumptions Underlying Baseline | |||||||||||||||
| Real GDP growth (in percent) | 5.2 | 3.2 | 1.5 | −6.1 | 5.0 | 4.4 | 4.1 | 3.3 | 3.3 | 3.3 | 3.2 | ||||
| GDP deflator in US dollars (change in percent) | 6.7 | 5.3 | 4.3 | −14.3 | 11.6 | 9.1 | 1.5 | 1.6 | 1.9 | 2.1 | 1.8 | ||||
| Nominal external interest rate (in percent) | 8.1 | 8.8 | 7.5 | 5.9 | 6.6 | 5.7 | 5.5 | 6.3 | 6.9 | 7.6 | 8.2 | ||||
| Growth of exports (US dollar terms, in percent) 6/ | 15.6 | 8.7 | 6.9 | −20.9 | 28.3 | 20.7 | 7.9 | 7.2 | 7.7 | 8.7 | 8.7 | ||||
| Growth of imports (US dollar terms, in percent) 6/ | 14.7 | 9.7 | 9.1 | −22.7 | 26.9 | 21.4 | 8.3 | 7.4 | 7.9 | 8.7 | 8.4 | ||||
| Current account balance, excluding interest payments | 1.0 | 0.6 | −0.2 | 0.6 | 0.7 | 0.0 | −0.1 | 0.0 | 0.0 | 0.1 | 0.2 | ||||
| Net non-debt creating capital inflows | 1.8 | 2.3 | 1.3 | 1.8 | 1.1 | 2.1 | 2.1 | 2.1 | 2.1 | 2.2 | 2.2 | ||||
Derived as [r - g - r(1 + g) + ea(1 + r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms, g = e = nominal appreciation (increase in dollar value of domestic currency), and a = share of domestic-currency denominated debt in total external debt.
The contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1 + r)]/(1 + g + r+gr) times previous period debt stock. r increases with an appreciating domestic currency (e > 0) and
For projection, line includes the impact of price and exchange rate changes.
Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
Goods and nonfactor services.
Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain of the last projection year.
Mexico: External Debt Sustainability Framework, 2006-16
(In percent of GDP, unless otherwise indicated)
| Actual | Projections | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 | 2015 | 2016 | Debt-stabilizing | ||||
| non-interest | |||||||||||||||
| current account 7/ | |||||||||||||||
| Baseline: External debt | 17.8 | 18.7 | 18.4 | 21.8 | 23.1 | 22.1 | 21.9 | 22.0 | 22.0 | 21.9 | 21.8 | −1.6 | |||
| Change in external debt | −2.7 | 0.9 | −0.3 | 3.4 | 1.3 | −1.0 | −0.2 | 0.1 | 0.1 | −0.1 | −0.1 | ||||
| Identified external debt-creating flows (4+8+9) | −3.5 | −2.8 | −0.9 | 3.4 | −3.7 | −1.9 | −1.8 | −1.5 | −1.4 | −1.4 | −1.4 | ||||
| Current account deficit, excluding interest payments | −1.0 | −0.6 | 0.2 | −0.6 | −0.7 | 0.0 | 0.1 | 0.0 | 0.0 | −0.1 | −0.2 | ||||
| Deficit in balance of goods and services | 1.3 | 1.6 | 2.2 | 1.5 | 1.3 | 1.5 | 1.7 | 1.8 | 1.9 | 2.0 | 1.9 | ||||
| Exports | 27.9 | 27.9 | 28.2 | 27.7 | 30.3 | 32.1 | 32.8 | 33.5 | 34.3 | 35.4 | 36.6 | ||||
| Imports | 29.2 | 29.5 | 30.4 | 29.2 | 31.6 | 33.7 | 34.5 | 35.3 | 36.2 | 37.3 | 38.5 | ||||
| Net non-debt creating capital inflows (negative) | −1.8 | −2.3 | −1.3 | −1.8 | −1.1 | −2.1 | −2.1 | −2.1 | −2.1 | −2.2 | −2.2 | ||||
| Automatic debt dynamics 1/ | −0.7 | 0.0 | 0.3 | 5.8 | −2.0 | 0.3 | 0.3 | 0.6 | 0.8 | 0.9 | 1.1 | ||||
| Contribution from nominal interest rate | 1.5 | 1.4 | 1.3 | 1.3 | 1.2 | 1.2 | 1.1 | 1.3 | 1.4 | 1.6 | 1.7 | ||||
| Contribution from real GDP growth | −0.9 | −0.5 | −0.3 | 1.4 | −0.9 | −0.9 | −0.9 | −0.7 | −0.7 | −0.7 | −0.7 | ||||
| Contribution from price and exchange rate changes 2/ | −1.3 | −0.9 | −0.8 | 3.1 | −2.3 | … | … | … | … | … | … | ||||
| Residual, incl. change in gross foreign assets (2-3) 3/ | 0.8 | 3.7 | 0.6 | 0.0 | 5.1 | 0.8 | 1.6 | 1.6 | 1.5 | 1.3 | 1.3 | ||||
| External debt-to-exports ratio (in percent) | 63.6 | 66.8 | 65.1 | 78.8 | 76.2 | 68.7 | 66.7 | 65.6 | 64.2 | 62.1 | 59.6 | ||||
| Gross external financing need (in billions of US dollars) 4/ | 72.0 | 61.4 | 73.4 | 61.7 | 57.8 | 77.3 | 85.0 | 92.2 | 100.4 | 111.9 | 118.3 | ||||
| in percent of GDP | 7.6 | 5.9 | 6.7 | 7.0 | 5.6 | 6.6 | 6.8 | 7.1 | 7.3 | 7.7 | 7.8 | ||||
| Scenario with key variables at their historical averages 5/ | 22.1 | 22.2 | 22.2 | 22.3 | 22.3 | 22.1 | −1.5 | ||||||||
| Key Macroeconomic Assumptions Underlying Baseline | |||||||||||||||
| Real GDP growth (in percent) | 5.2 | 3.2 | 1.5 | −6.1 | 5.0 | 4.4 | 4.1 | 3.3 | 3.3 | 3.3 | 3.2 | ||||
| GDP deflator in US dollars (change in percent) | 6.7 | 5.3 | 4.3 | −14.3 | 11.6 | 9.1 | 1.5 | 1.6 | 1.9 | 2.1 | 1.8 | ||||
| Nominal external interest rate (in percent) | 8.1 | 8.8 | 7.5 | 5.9 | 6.6 | 5.7 | 5.5 | 6.3 | 6.9 | 7.6 | 8.2 | ||||
| Growth of exports (US dollar terms, in percent) 6/ | 15.6 | 8.7 | 6.9 | −20.9 | 28.3 | 20.7 | 7.9 | 7.2 | 7.7 | 8.7 | 8.7 | ||||
| Growth of imports (US dollar terms, in percent) 6/ | 14.7 | 9.7 | 9.1 | −22.7 | 26.9 | 21.4 | 8.3 | 7.4 | 7.9 | 8.7 | 8.4 | ||||
| Current account balance, excluding interest payments | 1.0 | 0.6 | −0.2 | 0.6 | 0.7 | 0.0 | −0.1 | 0.0 | 0.0 | 0.1 | 0.2 | ||||
| Net non-debt creating capital inflows | 1.8 | 2.3 | 1.3 | 1.8 | 1.1 | 2.1 | 2.1 | 2.1 | 2.1 | 2.2 | 2.2 | ||||
Derived as [r - g - r(1 + g) + ea(1 + r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms, g = e = nominal appreciation (increase in dollar value of domestic currency), and a = share of domestic-currency denominated debt in total external debt.
The contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1 + r)]/(1 + g + r+gr) times previous period debt stock. r increases with an appreciating domestic currency (e > 0) and
For projection, line includes the impact of price and exchange rate changes.
Defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
The key variables include real GDP growth; nominal interest rate; dollar deflator growth; and both non-interest current account and non-debt inflows in percent of GDP.
Goods and nonfactor services.
Long-run, constant balance that stabilizes the debt ratio assuming that key variables (real GDP growth, nominal interest rate, dollar deflator growth, and non-debt inflows in percent of GDP) remain of the last projection year.
EXTERNAL DSA
Mexico’s external debt is low relative to GDP and will remain low over the medium term. A 30% dep reciation of the peso could bring external debt to 30 percent of GDP, a moderate level, mitigated by the fact that an increasing share of Mexico’s external debt is now denominated in peso. Other shocks, including growth, current account, and interest rate, would have only marginal effects on Mexico’s external indebtedness in relation to GDP.
Mexico: External Debt Sustainability: Bound Tests 1/
Citation: IMF Staff Country Reports 2011, 250; 10.5089/9781462325429.002.A002
Sources: International Monetary Fund, Country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.3/ One-time real depreciation of 30 percent occurs in 2011.Mexico: External Debt Sustainability: Bound Tests 1/
Citation: IMF Staff Country Reports 2011, 250; 10.5089/9781462325429.002.A002
Sources: International Monetary Fund, Country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.3/ One-time real depreciation of 30 percent occurs in 2011.Mexico: External Debt Sustainability: Bound Tests 1/
Citation: IMF Staff Country Reports 2011, 250; 10.5089/9781462325429.002.A002
Sources: International Monetary Fund, Country desk data, and staff estimates.1/ Shaded areas represent actual data. Individual shocks are permanent one-half standard deviation shocks. Figures in the boxes represent average projections for the respective variables in the baseline and scenario being presented. Ten-year historical average for the variable is also shown.2/ Permanent 1/4 standard deviation shocks applied to real interest rate, growth rate, and current account balance.3/ One-time real depreciation of 30 percent occurs in 2011.
