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Government anticipates 2019 spending cut of 12 billion

Mexico City, Mexico — The government of Mexico says that for next year, they anticipate a spending cut of more than 12 billion peso.

The announcement comes from the Ministry of Finance who estimates that next year, there will be an increase in revenue of 65,000 billion peso, but also an increase in expenses of more than 80,000 billion peso.

The federal government foresees a cut to the programmable spending of 12.2 billion peso for next year, a figure that is in agreement with the pre-criteria of economic policy.

The amount represents a decrease of 0.3 percent compared to the budget approved for 2018, explained the Ministry of Finance in a document sent to the Chamber of Deputies.

It will be the fourth consecutive budget cut after the 8.3 percent in 2016, 10.5 percent in 2017 and 2 percent in 2018.

The cut is the result of an expected increase in spending of 80.6 billion peso in 2019, due to the “higher financial cost (of debt) resulting from an increase in interest rates that has been observed in recent years, as well as greater shareholdings derived from the growth of the federal participabie collection and to theincreased payment of Adefas (debts of previous fiscals),” the Treasury explained in their document.

Revenues are expected to increase by 65 billion peso with respect to the amount approved for 2018 as a result of a higher tax collection from entities other than Pemex.

In the document, the government estimated higher economic growth and lower inflation for 2019. In addition to a stable exchange rate, compared to 2018, as well as a slight increase in oil production.