IMF Urges Mexico to Step Up Debt Reduction as Growth Stays Constrained

The International Monetary Fund said on October 2, 2026, that Mexico must intensify efforts to put its public debt on a declining path, warning that the draft 2027 budget implies a more gradual fiscal consolidation than previously announced and an upward debt trajectory. The fund projected Mexico's economy will grow 1.5% in 2026 and 1.8% in 2027, constrained mainly by external uncertainty, and called for a moderately tight monetary policy stance to lock in disinflation. Mexico's 2027 budget projects public debt rising to 55.0% of GDP from an estimated 54.0% at the end of 2026. Banxico held its benchmark rate at 6.50% in September and expects inflation to return to its 3% target in the fourth quarter of 2027. The IMF said headline inflation is near target, though core pressures remain elevated, and warned geopolitical tensions and El Niño effects could delay a durable return to target until early 2028. It cited revenue mobilization, spending prioritization and private-sector involvement as needed to protect growth-enhancing investment.