Fiscal Policies Implemented in Mexico
During COVID-19 (2021), Mexico implemented quite a number of different fiscal policies in order to help ease the effects many people were facing from this pandemic. One of the policies that were implemented was increased spending in healthcare so that the Ministry of Health in Mexico would have enough money to provide the proper resources to individuals. It is said 0.4% of Mexico's GDP (around 5 billion dollars) was spent additionally on healthcare (Policy Responses). Citizens seem to be in favor of this fiscal policy due to the fact that they now have access to healthcare with the proper resources. The government doesn’t seem to favor this policy as citizens could take advantage of the improved healthcare, but not go back to work. This fiscal policy seems to be put in place so that citizens can get the healthcare they need in order to get back to work and resume paying taxes to the government. However, people may not go back to work because their work could be closed, they don't want to because of other fiscal policies giving them free money, or for another reason.
Another fiscal policy that was implemented during COVID-19 was a 37.9 billion peso grant by the Ministry of Economy. In order to qualify for money from this grant, one has to be self-employed, own a family business that was acquiring Welfare, or for some other reason (Policy Responses). Citizens seem to be in favor of this fiscal policy as the government is giving people that qualify free money. The government though doesn’t seem to be in favor of this fiscal policy as they are just increasing national debt. Interestingly, the government might seem to favor this fiscal policy as individuals getting free money might improve consumer confidence. When consumer confidence increases, people spend more money and the government would collect more taxes. However, the money being given to individuals who qualify are struggling from the pandemic already, meaning they won’t go out and spend the money they receive from the grant.
Mexico's national debt as a % of GDP
As of 2021 (focusing on the year the fiscal policies stated above were implemented), Mexico's national debt as a % of GDP is around 61%. This means that Mexico's GDP is significantly more than its national debt, which indicates that Mexico's economy is doing quite well. Moreover, when looking at the fiscal policies Mexico implemented, the charts are accurate in the sense that both the GDP and national debt increased (Mexico GDP and Mexico - National DEBT). This is because the policies cost money to implement and because the policies work towards strengthening the economy (this translates to increasing GDP). With this being said, it is likely that Mexico decided to implement these policies due to COVID-19 drastically decreasing Mexico's GDP in 2020. The government wanted to jump-start the economy again at the cost of increasing national debt.
Work Cited
“Policy Responses to covid19.” IMF,
www.imf.org/en/Topics/imf-and-covid19/Policy-Responses-to-COVID-19#M.
O'Neill, Aaron. “Mexico - National DEBT 2016-2026.” Statista, 8 June 2021, www.statista.com/statistics/531774/national-debt-of-mexico/.
“Mexico GDP.” Mexico GDP | 1960-2020 Data | 2021-2023 Forecast | Historical | Chart | News, tradingeconomics.com/mexico/gdp.
O'Neill, Aaron. “Mexico - National Debt in Relation to Gross Domestic Product (GDP) 2026.” Statista, 12 May 2021, www.statista.com/statistics/275429/national-debt-of-mexico-in-relation-to-gross-domestic-product-gdp/.
Do you think all citizens are in favor of these policies? Sometimes wealthier citizens oppose spending because of the threat of higher taxes. Also, how can it be that "the government" opposes these policies in spite of the fact that it is "the government" that imposes them?
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