Federal Government decreases investment in public infrastructure

Mexico.- The subsidies for public investment in infrastructure and works have reached the highest level recordedO, however, despite the amounts have led to the registration of the second worst decline in decade.

208 billion pesos is the amount registered in public investment in the period from January to April, that is, the first four months of the year, which shows that the current public investment in infrastructure and works in 2021 is 3.2% by below what was done in 2020.

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In other words, 20 billion pesos below the figures registered in the last 10 years, according to information from the Secretariat of Finance and Public Credit.

However, subsidies from the Federal Government increased by 11.6%, that is, around 324 billion pesos, a figure for which there is a record in the increase in the subsidy in public investment for infrastructure and works in the last 10 years, since they are around 80 billion pesos above the average.

Among the subsidies are transfers to pension schemes such as IMSS, ISSSTE, Pemex and contribution funds for states, and programs such as Youth Building the Future, Elderly Pensions, Guarantee Prices, Scholarships, Sowing Life, among others.

With the results of 2021, 6 years have passed since spending on subsidies is higher than public investment.

Alejandra Macías, Research Director of the Center for Economic and Budgetary Research (CIEP), explained that the drop in public investment in recent years is serious for the country’s development potential, which is not offset by the increase in subsidies.

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“The subsidies have the objective of favoring the well-being of the population, but the infrastructure has a more lasting effect. Social programs should have a supportive logic, but of generating capacities in the population so that they remain in a situation of non-vulnerability permanently, “he commented.

He explained that the vision of short-term development has worsened in recent years and, especially, with the new federal administration.

The fact that public investment is lower than subsidies is very bad news for the country’s growth and reflects the fact that the electoral struggle through welfare spending has been increasing in priority, said Enrique Díaz Infante, director of the Financial Sector and Social Security Program of the Espinosa Yglesias Study Center (CEEY).

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“All this shows the urgency of a tax reform that increases income and revises expenses, in order to generate fiscal space to increase public investment,” he said.

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