Moody's Downgrades Mexico's Debt Outlook to Negative

Moody’s has downgraded Mexico's debt outlook from stable to negative, primarily due to concerns over rising fiscal deficits and recent judicial reforms that may undermine the independence of the judiciary. The federal deficit is projected to reach 6% of GDP in 2024, exacerbated by increased government spending and financial support for the state-owned oil company, Pemex. President Claudia Sheinbaum has criticized Moody’s for bias against her administration, arguing that the rating agency's evaluations stem from outdated economic models. The proposed judicial reforms, which require federal judges to stand for election, have raised alarms regarding potential political influence and risks to judicial integrity. Analysts warn that Mexico's fiscal health could deteriorate further if these challenges are not addressed, impacting the country's credit profile. The Mexican peso has shown volatility in response to these developments, reflecting investor concerns about the nation's economic stability.