Carlos Serrano warns that Pemex will be a fiscal challenge for Claudia Sheinbaum, urging reforms and greater private investment to stabilize Mexican finances.
Mexican Petroleum (Pemex) will represent a significant fiscal challenge for the government of Claudia Sheinbaum, who will assume the presidency on October 1, according to Carlos Serrano, chief economist at BBVA Mexico.
During his participation in the 13th Issuers Forum organized by the Mexican Stock Exchange (BMV) in Quintana Roo, Serrano highlighted that Pemex has more liabilities than assets, which makes the oil company a challenge for the next administration.
Serrano warned that continuing granting 1.5 points of the Gross Domestic Product (GDP) in support of Pemex is not sustainable and could compromise Mexican finances. She pointed out the need for the next president to implement changes in the oil company’s policy, including the reactivation of negotiations with the private sector to increase investment in deepwater oil exploration and extraction. Serrano emphasized that Pemex lacks the capital and experience necessary for these operations.
The economist also mentioned that private investment does not affect sovereignty over oil, but, on the contrary, could strengthen Mexican finances. He highlighted that Pemex loses 100 billion pesos in refining and that it would be more economical to import gasoline, allowing those resources to be allocated to social spending.
Serrano regretted that this year there will be the highest deficit since the 1980s and stressed the need to reduce it to 3% of GDP next year to avoid the risk of recession. He proposed that the government must present a credible plan to achieve this goal without harming the economy.
In addition, Serrano pointed out the uncertainty in the markets regarding the expectations of Claudia Sheinbaum’s government, due to the possibility that Morena and its allies modify the Constitution, which generates fears among investors.
