Mexican government announces measures to boost Pemex finances

The national oil company will receive a 73.5 billion peso (US$4.2 billion) liquidity boost.

The government said the company must reduce its liabilities by a total 73.5 billion pesos (US$4.2 billion). (Photo: Archive/El Universal)
English 13/04/2016 10:49 Reuters Actualizada 18:33

Mexico's government announced on Wednesday a series of measures to improve national oil company Pemex's ailing finances, giving it a 73.5 billion peso (US$4.2 billion) liquidity boost.

That includes a capital injection of 26.5 billion pesos and a credit facility for a further 47 billion pesos to pay down pension costs this year. The government said the company must reduce its liabilities by a total 73.5 billion pesos.

Mexico's oil output has slid for 11 consecutive years while prices have fallen about 70 percent since 2014. 

The federal government's support for Pemex was made possible by previously announced budget cuts in February, the ministry said in a statement.

Miguel Messmacher, a deputy finance minister, said later on Wednesday that the Mexican oil company will have less need to further tap credit markets following the liquidity injection.

"This is good, because it is comprehensive and it deals with the main issues," said Alexis Milo, an economist at Deutsche Bank in Mexico City.

"The reaction of markets will be positive because this is the beginning of the structural changes that markets were expecting," he added.

Pemex has historically provided federal coffers with as much as 40 percent of its revenue, but recently that amount has been halved.

A constitutional energy overhaul passed in 2013 at the start of President Enrique Peña Nieto's administration ended Pemex's decades-long monopoly and promises to boost future oil output by luring new private and foreign producers into the country.

 

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