Austerity in Mexico: Economic Impacts and Unpleasant Choices Ahead Juan Carlos Moreno-Brid, Noel Perez-Benitez and Hector J. Villarreal

Mexico has a long history of dealing with austerity as a tool to achieve fiscal consolidation. During the last 40 years, the country has repeatedly implemented programs for austerity and consolidation aimed at reducing fiscal imbalances, derived, in part, from acute macroeconomic crises. Since the late eighties, it has followed a more prudent approach to managing public finances and has avoided large deficits. However, the current outlook on Mexico‚Äôs fiscal performance is complicated. Mounting pressures to raise expenditure, along with major changes in its composition, and structural fragilities in fiscal revenues, have resulted in eight years of public deficits and…