Former AMLO secretary predicts ‘economic cyclone’ for 2024

Carlos urzua, former holder of Secretariat of Finance and Public Credit (SHCP) of Andrés Manuel López Obrador During his first six months in government, he assured that by 2024 the social policies of the 4Ts will put in place a “Economic cyclone” Mexico’s public finances.

Urzúa Macías published this Monday, July 19 in a chronicle of The universal, which indicates that the López Obrador government has been a failure in health, safety, education and infrastructure and that the legitimacy of the federal administration rests on welfare; however, the latter, in terms of financial support for the elderly, is currently not sustainable.

Initially, the graduate of the Technological Institute of Higher Studies of Monterrey (ITESM) offered the data with which the pension was started for this demographic group, which was originally intended for people aged 68 or over with transfers bimonthly of 2,700 pesos; However, AMLO’s announcement to increase the amount to 6,000 pesos and increase the age for granting this benefit to 65, disrupted the state’s ability to guarantee this subsidy.

According to the former head of the Treasury, the current amounts of aid to this population remain acceptable, since they represent an annual amount close to 120,000 million pesos, which represents the 0.5% of gross domestic product (GDP). However, if the promise made by AMLO by the end of its administration (2024) comes true, spending for the elderly would be difficult to sustain.

The math teacher weighed two variables to ensure that López Obrador’s well-being will end in a “Storm” by the end of the six-year term. The first variable he considered was the age pyramid, which he said precipitates this expanded demography relative to the population that already enjoys this advantage.

Likewise, the second variable that makes it impossible to realize this advantage in this amount for this number of people is the tax collection, which is not the most optimal for maintaining the assistance of the 4T.

In 2020, they had 7.4 million people over 68Thus, the granting of the non-contributory pension of 2,700 pesos represents 120 million pesos. But given that “the percentage of older people is growing rapidly”, by 2024, spending on older people for 65 years would be 360 ​​billion pesos, which represents the 1.5% of current GDP.

This means that the calculation with which the estimate was made does not take into account the growth estimates of this last measurement parameter, which is expected to grow by around 5% this year alone.

However, one piece of information he took into consideration for his column was contributory pensions, which are said to be higher than 4% of GDP in 2024. It should be noted that in this section, he did not specify whether it is the GDP calculated for that year or whether it is again that obtained in 2020 and replicated for that year. .

According to the former member of the AMLO cabinet, in short, the cost of social programs for 2024 will be of 6.5% of GDP, for which he warns that “if there is no far-reaching tax reform, this last percentage will represent almost half of tax revenues in 2024 ”.

Finally, it is worth recalling the closure of Urzúa Macías in the fourth quarter, as it was the first resignation presented in López Obrador’s cabinet in a hurry, this because the announcement of the resignation of the post was made public via Twitter and not by the presidential institution, which was considered by analysts as “a betrayal”.

At that time, AMLO chose to place Arturo Herrera in charge of SHCP, an act which was welcomed by international markets, because after the publication of the news, the price of the peso against the dollar was negatively affected; However, ultimately and with the placement of Herrera Gutiérrez, the peso has returned to the figures it managed at the start of the day.

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