Oil or nothing

15 October 2019 By Anna Szymanski Follow @Three_Guineas

The IMF has panned the isolationist approach AMLO, as he’s known, is taking. His budget relies on the state oil giant producing cash, but Pemex needs all the pesos and dollars it can get to boost production and reduce $102 bln of debt. Without private investment, it can’t add up.

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The International Monetary Fund released a staff report on Mexico’s economic progress on Oct. 11 following an official visit that took place from Sept. 19-30.

Mexico’s 2020 budget, released in September, targets 1.5% to 2.5% GDP growth and a 2.1% budget deficit. It also assumes oil production will increase by 15%. The IMF forecasts GDP growth of 0.4% in 2019 and 1.3% in 2020, while Moody’s forecasts 0.5% growth in 2019 and 1.5% in 2020.

Both Moody’s Investors Service and Fitch Ratings say Pemex will probably require increased government support to replace reserves and meet production targets. Mexican Finance Minister Arturo Herrera said on Oct. 4 that Pemex’s financial debt declined $5 billion to $102 billion in the third quarter.

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