Mexico's President AMLO's fiscal policies are causing the largest budget deficit the country has seen since the 1980s.
In the heart of Mexico, President Andres Manuel Lopez Obrador's administration is making significant strides in both infrastructure and social programs.
The government has allocated a staggering $43 billion for social programs in 2023, with over half of it earmarked specifically for the elderly. This commitment to the elderly population is a testament to Lopez Obrador's focus on social welfare.
The Morena party, led by the President, took over leadership of Oaxaca in December 2022. Under their governance, Oaxaca has seen a surge in economic growth, with the state growing its economy by 10% in the first nine months of last year, largely thanks to public spending.
One of the key infrastructure projects includes a $30 billion tourist train and a nearly $20 billion oil refinery in Tabasco State. However, the infrastructure works are not yet completed, which means seeing any returns on investment could take longer than originally expected.
The government's social initiatives include a universal pension program, which has enrolled locals like Maria Alicia Jimenez Ibañez, a resident of Oaxaca. Before, Jimenez Ibañez, whose mother sells handmade totopos, recounts that money just disappeared. Now, she praises the public spending, stating that they're seeing it.
Payments under the new pension program are made every two months at public banks set up across the country. Lopez Obrador is also boosting stipends for students and retirees, showering the state oil company Pemex with cash, and trying to get landmark construction projects finished.
The popular agenda is helping Lopez Obrador's party retain the presidency with a landslide win in the June election. Claudia Sheinbaum, the Morena party's chosen candidate and a former Mexico City mayor, has a commanding poll lead. Among voters who receive social programs or whose family members do, 64% say they intend to vote for Sheinbaum, while only 21% say they will vote for the leading opposition candidate Xochitl Galvez.
However, the government's increased spending has led to the biggest budget deficit since the 1980s. The budget deficit could potentially leave Lopez Obrador's successor in a financial bind. Debt-service costs this year are expected to reach 3.7% of economic output, the most in at least three decades.
Despite these challenges, President Lopez Obrador remains undeterred, recently celebrating Benito Juarez's 215th anniversary in Guelatao, Oaxaca. The administration has also started a state-run airline as part of its infrastructure investments, but it is not expected to make money in the short term.
As the June elections approach, it remains to be seen whether Lopez Obrador's focus on infrastructure and social programs will secure another term for his party.
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