May 12 - Credit ratings firm S&P revised Mexico's sovereign outlook to "negative" from "stable", pointing to the possibility that fiscal consolidation will proceed only slowly. The agency said that persistently weak economic growth could contribute to a faster-than-expected rise in government indebtedness and elevate the public sector's interest costs.
S&P identified Mexico's low per capita growth as a principal constraint on the country's credit profile. The agency noted that soft overall economic activity, inflexible spending commitments and the fragile finances of the largest state-owned companies are reducing fiscal flexibility and exerting upward pressure on debt metrics.
The ratings firm singled out the fiscal implications of continued government support for the state energy producer Petroleos Mexicanos (Pemex) and the national power utility Comision Federal de Electricidad (CFE), saying such support is expected to place additional strain on public finances.
Although S&P expects trade links with the United States to remain strong, it said uncertainty surrounding the renegotiation of the free trade agreement is weighing on investment sentiment. The agency anticipates only gradual fiscal consolidation as growth recovers and energy-related shocks subside.
On specific fiscal projections, S&P forecasts Mexico's general government deficit will reach 4.8% of GDP in 2026, attributing the wider shortfall to a weak economy and government measures to stabilize fuel prices through foregone tax revenue. The agency also projects net general government debt to increase to roughly 54% of GDP by 2029, up from 49% in 2025.
Despite the change in outlook, S&P kept Mexico's long-term sovereign ratings unchanged, maintaining a "BBB" rating on long-term foreign currency debt and a "BBB+" rating on long-term local currency debt.
Summary of the agency's position: S&P has adjusted the outlook to negative because slow fiscal consolidation combined with weak growth and continued fiscal support for large state enterprises could accelerate debt accumulation and raise interest burdens, even as the current sovereign ratings remain intact.