Mexico trims deficit in 2025 as tax revenues hit record

By Ana Isabel Martinez and Brendan O'Boyle

MEXICO CITY, Jan 30 (Reuters) - Mexico trimmed its fiscal deficit in 2025 as it notched a record tax intake, the country's finance ministry said on Friday.

Latin America's second-largest economy ended 2025 with a fiscal deficit equal to 4.3% of gross domestic product (GDP), the finance ministry said in its fourth-quarter public finances report, narrowing from a 5.8% deficit at the end of 2024. The government had initially projected a fiscal deficit of 3.9% of GDP for last year, but later revised the target upward.

President Claudia Sheinbaum's government has faced pressure to narrow the deficit while keeping a pledge to expand social programs and support the finances of heavily indebted state oil company Pemex. She has resisted calls for a sweeping fiscal overhaul, arguing the government can raise revenue by improving tax collection and cracking down on evasion. Her administration has also rolled out new taxes on products deemed unhealthy, including soda, cigarettes and video games.

KEY DETAILS FROM THE REPORT:

• Tax revenue rose to 15.1% of GDP, the highest on record, due in part to stepped-up anti-evasion efforts, stronger income tax and value-added tax collection, and higher import duties driven by tighter customs enforcement and changes affecting low-value imports

• The public sector budget deficit was 3.9%, down 1.5 percentage points from 2024, "one of the largest fiscal consolidation efforts seen in decades."

• Despite the tightening, social spending reached a record 13.1% of GDP

• Total public debt stood at 52.6% of GDP at the end of the fourth quarter, up slightly from a year earlier

• Pemex debt fell by $10.2 billion in 2025, reaching its lowest level since 2014