Mexico’s 2026 budget: Moralising and regressive.

Sheinbaum’s refusal to do a tax reform puts the poorest on a diet.

Austerity still rules in Mexico a little under year since president Claudia Sheinbaum took office. Her reasons are macro-economically sound. Her predecessor and mentor left her with a historic budget deficit which threatened the country’s finances. In 2024, the annual fiscal deficit sat at 4.9% of GDP. Her government immediately slashed spending and reduced infrastructure projects while trying to avoid any cuts to social spending, which actually increased.

The 2025 budget proposal was to reduce the deficit back down to 3.2%—in line with the past decade’s rates. In this, says the government’s own 2026 budget, the Sheinbaum administration has failed. The estimate for this year’s deficit now stands at 3.6%.

The 3.2% target was ambitious, and the current predicted rate still puts Mexico on the track to stabilising its debt. This is not only because it is lower but because the government has also made sure to reduce dependency on outside financing. Today, the vast majority of debt is in pesos (rather than foreign currencies) and set to be paid in the long term.

But it is increased income that has kept government feeling optimistic. How has Sheinbaum suddenly conjured it at record levels, despite the economy and investment slowing to a crawl?