Mexico Public Finances – Offsetting Forces in 2Q26

Research evidence excerpt

Mexico Public Finances – Offsetting Forces in 2Q26

J P M O R G A N Latin America Economic Research

03 August 2026

Mexico

Public Finances – Offsetting Forces in 2Q26

• Public finances showed offsetting forces last quarter EM, Economics Research

• Structural spending increased 9.7% ytd at the expense of investment Gabriel Lozano

(52-55) 5540-9558

• Revenues remain constrained by low growth in tax collection (0.4%ytd) gabriel.lozano@jpmorgan.com

• Public deficit came in better than projected, along with lower debt stock BancoMúltiple,J.P.Morgan,J.P.MorganS.A.,GrupoInstituciónFinancierode Banca

The 2Q26 Public Finance Report — released at the end of July — shed important Santiago Homberg Saury

light on the context of global and domestic challenges. Interestingly, it continued (52-55) 5540-9499

santiago.hombergsaury@jpmchase.com

to evidence the lingering offsetting dynamics between expenses and revenues J.P. Morgan Casa de Bolsa, S.A. de C.V., J.P.

observed in the first quarter. Public spending increased on the back of higher Morgan Grupo Financiero

structural expenditures (which include payrolls, subsidies and social transfers)

although lower investment helped contain the overall rise in spending, as has been

the case for the past few years. On the revenue side, growth-sensitive categories

remained muted, but excise taxes, import duties, and oil-related revenues were

brighter. These offsetting dynamics helped limit the 1H26 budget deficit to MXN

$578.9bn, but also highlighted the need for structural revenue-enhancing measures

in light of increasingly rigid expenditure commitments.

Budget balance evolution

MX$bn (2018 pesos)

4.00 3.4 3.3 3.3

2024 2025 2026 2.8 2.9 2.9 3.00

2.00

1.00

0.00

-1.00 -0.6 -0.3 -0.4

Budget balance Revenue Spending

Source: Ministry of Finance