{"id":567,"date":"2016-03-10T07:49:56","date_gmt":"2016-03-10T13:49:56","guid":{"rendered":"https:\/\/trends.ufm.edu\/en\/?post_type=articulo-semanal&p=567"},"modified":"2016-11-28T15:30:42","modified_gmt":"2016-11-28T21:30:42","slug":"mexico-petroleum-and-public-finance","status":"publish","type":"articulo-semanal","link":"https:\/\/trends.ufm.edu\/en\/article\/mexico-petroleum-and-public-finance\/","title":{"rendered":"Mexico: Petroleum and Public Finance"},"content":{"rendered":"

By Edgar Ortiz February 2, 2016<\/p>\n

Translated from Spanish by Katarina Hall<\/p>\n

eortiz@ufm.edu<\/a><\/p>\n

 <\/p>\n

Public debt is an increasingly important issue for Mexico. Between January 2014 and December 2015, Mexico\u2019s public debt grew 33%.<\/p>\n

 <\/p>\n

\"A.40-1TotalNetPublicSectorDebt\"<\/a>

Source : National Institute of Statistics and Geography<\/p><\/div>\n

 <\/p>\n

As Mexico\u2019s debt to GDP reaches 52%, authorities continue to downplay the debt\u2019s importance by pointing out that the debt level is still below that of similar nations. A poor consolation. Below is the debt\u2019s change as percentage of the GDP.<\/p>\n

 <\/p>\n

\"A.40-2PublicDebtasGDP\"<\/a>

Source : National Institute of Statistics and Geography<\/p><\/div>\n

 <\/p>\n

The debt\u2019s rise from 39% to 52% is not the most worrying thing for Mexico. Mexican public spending has not reflected the county\u2019s increasing economic growth. Whether because of the current expenditure or the poor controls encouraging waste, Mexico finds itself in a difficult situation to overcome: more debt, low economic growth, and little increase in tax revenues to cover debt levels.<\/p>\n

Mexico has been very comfortable financing part of its budget with oil revenues. Nonetheless, the drop in oil prices has directly and aggressively impacted Mexico\u2019s treasury.<\/p>\n

 <\/p>\n

\"A.40-3OilRevenuesasPercentageBudget\"<\/a>

Source : National Institute of Statistics and Geography<\/p><\/div>\n

 <\/p>\n

Two years ago, oil financed up to a third of Mexico\u2019s annual budget. Nowadays, it cannot even cover a fifth part of the country\u2019s budget. This gap was covered with public debt. The problems Mexico must address cover three major themes:<\/p>\n

First, oil will not recover to prices that exceed $100 per barrel\u2014at least not in the next year. If oil prices were to return to those levels, they would do so gradually.<\/p>\n

The second theme is the Fed\u2019s interest rate raise. The Fed\u2019s decision sent a signal that interest rates will rise gradually but steadily. This is bad news for a country in debt: refinancing will be at higher interest rates. Mexico could have problems if it plans to accommodate its future budget with high debt levels, and could face problems if it wished to engage in future debt.<\/p>\n

Third, low oil prices affect Mexico\u2019s trade balance, and with it the already deteriorated exchange rate of the Mexican peso. In 2014, oil represented more than 10.5% of Mexico\u2019s exports. Today, it only represents 6.3%, maintaining the trend toward a depreciated peso and an expensive external debt.<\/p>\n","protected":false},"excerpt":{"rendered":"

Public debt is an increasingly important issue for Mexico. Between January 2014 and December 2015, Mexico\u2019s public debt grew 33%. As Mexico\u2019s debt to GDP reaches 52%, authorities continue to downplay the debt\u2019s importance by pointing out that the debt level is still below that of similar nations. A poor consolation. Below is the debt\u2019s change as percentage of the GDP.<\/p>\n","protected":false},"author":106,"featured_media":568,"comment_status":"open","ping_status":"closed","template":"","meta":{"anio":"","mes":"","id_estadisticas":"","newsletter_link":"","portada_informe":"","subtitulo":"","footnotes":""},"tags":[88],"class_list":["post-567","articulo-semanal","type-articulo-semanal","status-publish","has-post-thumbnail","hentry","tag-mexico"],"_links":{"self":[{"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/articulo-semanal\/567","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/articulo-semanal"}],"about":[{"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/types\/articulo-semanal"}],"author":[{"embeddable":true,"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/users\/106"}],"replies":[{"embeddable":true,"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/comments?post=567"}],"version-history":[{"count":1,"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/articulo-semanal\/567\/revisions"}],"predecessor-version":[{"id":595,"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/articulo-semanal\/567\/revisions\/595"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/media\/568"}],"wp:attachment":[{"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/media?parent=567"}],"wp:term":[{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/trends.ufm.edu\/en\/wp-json\/wp\/v2\/tags?post=567"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}