Mexican fiscal policy during Peña Nieto's administration (2013-2017). A first assesment

Abstract

This paper presents a preliminary assessment of the various impacts of the fiscal reform undertaken by President Enrique Peña Nieto. First, the weaknesses and vulnerabilities of the fiscal structure that the new administration had to face are shown, in particular the dependence on oil revenues. The need for a fiscal reform that increased income, diminish fiscal evasion and labour informality was evident. In the second part of the paper the actual reform measures are discussed, as well as its various measurable impacts. It is particularly relevant the unexpected oil price drop and the government response to maintain gasoline prices and thus prevent fiscal revenues from declining, as well as the government's repeated forecasting mistakes. Finally, it is concluded that in spite of being insufficient, Peña Nieto's fiscal reform was successful in increasing the fiscal burden from 8.4% of gdp in 2012 to 13.1% in 2017. However, such increase in revenues was not enough to prevent the rise of the public debt in almost 10 percentage points of gdp, in spite of the fact that the government took the operational surpluses of Banco de México.