Fitch Ratings on Friday affirmed Mexico’s long-term local-currency and foreign-currency issuer default rating (IDR) at “BBB-,” with a stable rating outlook, citing “sound” fiscal policy and stable public finances.

“The government continues to show firm commitment to moderate fiscal deficits that maintain stable debt/GDP,” the agency said in a statement, adding that it does not expect fiscal policy to change ahead of the 2024 presidential elections.

The ruling National Regeneration Movement (MORENA) party is favored to win.

Fitch predicted Mexico’s real GDP growth will slow to 2.5% this year from 3.0%, a better result than previously expected, before declining to 1.8% in 2024 as the economy grapples with a U.S. slowdown hitting export demand and remittances.

The government deficit should increase to 3.5% of GDP this year from 3.3% in 2022, it added, before shrinking to 3.2% in 2024.

Both revenues and spending should land below 2023 budget estimates, it added, due to a more challenging macro environment.

Next year, Fitch said spending should fall sharply as the government aims to complete its flagship infrastructure projects – the Maya and Isthmus train projects and Dos Bocas refinery – before the June elections.

Inflation, meanwhile, should ease to 4.8% by the end of this year as the central bank gradually eases its monetary policy, it said.

Despite stable finances and prudent policies, Fitch said its rating was held back by muted long-term growth, policy interventions it deemed were affecting investment prospects, and potential liabilities linked to Pemex, the country’s heavily indebted state oil firm.

Fitch predicted the government will stay committed to its financial support of Pemex as part of a policy of boosting the state-owned energy sector, though given legal restrictions, it will likely not guarantee the firm’s debt.