IMF Concludes Mexico Review, Cuts Flexible Credit Line Access

Washington, DC: On November 11, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] and the mid-term review under the Flexible Credit Line (FCL) Arrangement with Mexico. The Board approved the authorities' request to reduce access from 200 to 150 percent of quota, equivalent to SDR 13.36905 billion (about US$18 billion [2] ). [3] The Mexican authorities stated their intention to continue to treat the arrangement as precautionary.

Economic activity has strengthened during 2026 despite elevated uncertainty. Supported by less restrictive domestic policies and strong exports, real GDP growth is projected to accelerate from 0.5 in 2025 to 1.5 percent in 2026, and strengthen further to 1.8 percent in 2027 as uncertainties ease and investment recovers. Headline inflation has declined and is near Banxico's target but underlying price pressures persist and above-target inflation expectations are delaying convergence to the 3 percent target.

The fiscal deficit narrowed markedly in 2025 and is expected to decline further in 2026. However, the gradual consolidation envisaged for the coming years is expected to leave public debt on a moderate upward trajectory, before broadly stabilizing by 2031. After easing earlier in the year, Banxico has appropriately maintained the policy rate at a moderately restrictive level.

The financial system remains sound, supported by effective financial oversight, strong capital and liquidity, solid profitability and low nonperforming loans. Mexico maintains adequate international reserve buffers and a sustainable external position, with a current account deficit that is expected to narrow to near balance this year, supported by strong exports, before widening gradually as domestic demand recovers.

At the conclusion of the Executive Board's discussion, Mr. Okamura, Deputy Managing Director and Chair stated:

Despite heightened external uncertainty, the Mexican economy has gained strength and headline inflation has moved close to Banxico's target, supported by prudent macroeconomic policies. Fiscal consolidation has continued, and the 2027 budget proposal aims at further lowering the deficit over the medium term. The moderately restrictive monetary policy stance continues to support disinflation, given lingering price pressures. However, a faster pace of fiscal consolidation could be considered to put public debt on a downward path and rebuild policy space, while steps are taken to strengthen the fiscal framework and its credibility. Reforms to encourage private investment, reduce labor informality, and enhance productivity remain central to boost living standards.

Overall, Mexico's macroeconomic policies and institutional policy frameworks remain very strong, with a flexible exchange rate regime supported by adequate external buffers, a credible inflation-targeting framework, and a well-regulated financial sector. Nonetheless, Mexico continues to be exposed to sizable external risks amid elevated uncertainty, although these risks have moderated owing to Mexico's stronger buffers, resilient exports, and proven ability to adjust to global shocks. In this context, the authorities' request to reduce access from 200 to 150 percent of quota under the Flexible Credit Line arrangement is appropriate and consistent with the intention to continue reducing access as external risks recede and domestic buffers further strengthen.

The authorities intend to continue treating the arrangement as precautionary and are firmly committed to maintaining their sustained track record of very strong macroeconomic policies and institutional policy frameworks. They consider that the arrangement will continue to provide valuable protection against external risks should they materialize.

Executive Board Assessment [4]

Executive Directors welcomed Mexico's resilience amid elevated external uncertainty, underpinned by very strong macroeconomic policies and policy frameworks. Directors noted the recent strengthening in economic activity and headline inflation near target, notwithstanding lingering underlying pressures. They underscored the importance of maintaining prudent policies and advancing growth-enhancing reforms.

Directors welcomed the authorities' commitment to fiscal prudence. Most Directors called for a credible, more ambitious, front-loaded adjustment to put public debt on a declining path and rebuild policy space, centered on revenue mobilization, better-targeted transfers, and stronger Pemex performance, while protecting priority social and infrastructure spending. Some Directors, however, saw merit in a more gradual adjustment to safeguard growth. Directors stressed the need to strengthen the fiscal framework to enhance credibility. They welcomed plans to boost infrastructure investment, while calling for transparent treatment of associated fiscal risks and liabilities.

Noting elevated core inflation, above-target inflation expectations, and the recent reduction in the policy rate, Directors encouraged maintaining a data-dependent, moderately restrictive stance until underlying pressures abate. Most Directors encouraged clear communication of the monetary policy objective and reaction function, while some cautioned against explicit guidance on the policy rate path to preserve flexibility. Directors agreed that the flexible exchange rate should remain the key shock absorber.

Directors concurred that the financial system remains sound, while emphasizing the need for monitoring the sovereign-bank nexus, and effectively implementing the AML/CFT framework. They encouraged advancing financial deepening and inclusion by fostering competition and prudently taking advantage of growing pension system's assets.

Directors underscored the need to unlock private investment and boost productivity. They encouraged preserving a rules-based trade and investment framework, enhancing regulatory predictability, closing infrastructure gaps, and ensuring reliable energy supply. Directors also urged progress in strengthening security, governance and the rule of law, combating corruption, and reducing informality.

Directors agreed that Mexico continues to meet the FCL qualification criteria and supported reducing access from 200 to 150 percent of quota, consistent with very strong policies and policy frameworks, adequate reserves, and some moderation in external risks. Directors welcomed the authorities' intention to continue treating the arrangement as precautionary. Some Directors stressed that future access and exit strategy should remain state contingent.

[1] Under Article IV of the IMF's Articles of Agreement, the IMF holds bilateral discussions with members, usually every year. A staff team visits the country, collects economic and financial information, and discusses with officials the country's economic developments and policies. On return to headquarters, the staff prepares a report, which forms the basis for discussion by the Executive Board.

[2] Amount based on the Special Drawing Rights (SDR) quote as of November 11, 2026, of 1 USD = SDR 0.739958.

[3] The current two-year FCL arrangement for Mexico was approved by the IMF's Executive Board on November 13, 2025 (see Press Release No. 25/374).

[4] At the conclusion of the discussion, the Managing Director, as Chair of the Board, summarizes the views of Executive Directors, and this summary is transmitted to the country's authorities. An explanation of any qualifiers used in summings up can be found here: http://www.IMF.org/external/np/sec/misc/qualifiers.htm .