Mexico to implement strict public debt management

01/02/2020
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08:53
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Reuters
Mexico to implement strict public debt management
President López Obrador has sought tu run an austere government – Photo: Diego Simón Sánchez/EL UNIVERSAL

Mexico to implement strict public debt management

01/02/2020
08:53
Reuters
Mexico City
Stefanie Eschenbacher. Frank Jack Daniel & Tom Brown/REUTERS
-A +A
Mexico’s Finance Ministry said debt management would be “strict and transparent” with an overall goal of guaranteeing sustainable public debt levels over the long term

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Mexico’s Finance Ministry pledged strict management of public sector debt on Thursday and said the government’s financing needs would be lower this year than last, when the country’s credit ratings came under intense scrutiny.

Leftist President Andrés Manuel López Obrador has sought to run an austere government while throwing lifelines to state oil company Pemex, which helped bring down its financial debt to USD $99.6 billion last year.

Did you know Mexico and Pemex are at risk of a rating downgrade in 2020?

Even so, two credit rating agencies flipped their sovereign outlook for the country to negative in 2019 and one downgraded its rating.

Pemex is still teetering on the brink of a downgrade to junk status.

The Finance Ministry said in a statement that public sector finance needs were estimated at 11.8% of gross domestic product in 2020, down 0.7 percentage points from a year earlier. Government financing needs will be 7.5% of GDP.

Mexican economy: declining exports and stagnation

In 2020, it added, Mexico’s debt management strategy will aim to improve the maturity profile as well as cost and risk characteristics. It will center on local debt issuance and favor fixed-rate and long-maturity instrument, the statement said.

The Finance Ministry also said debt management would be “strict and transparent” with an overall goal of guaranteeing sustainable public debt levels over the long term.

Did you know the downfall of Mexico's state oil company Pemex has lasted for 20 years?

Such a conservative approach could indicate López Obrador is unlikely to open the purse strings on public spending to boost Mexico’s stagnant economy, which contracted last year for the first time in a decade.

Did you know Mexico's economy grew 0% in 2019?

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