Introduction
The daily press conferences, or “mañaneras,” have become the primary platform for shaping the narrative of the current administration. While these briefings can express any viewpoint, truthful or not, establishing credibility in financial markets regarding Petróleos Mexicanos (Pemex) and public finances requires more than populist rhetoric.
Pemex’s Fiscal Contribution and Financial Burden
When the current administration took power, Pemex still contributed positively to public finances. In 2018, originating petroleum revenues amounted to 880.135 billion pesos.
Under the “Fourth Transformation,” Pemex has become a financial burden on the state, with government support between 2019 and 2024 totaling 1.73 trillion pesos through capital contributions, reductions in the “Derecho por Utilidad Compartida,” and other tax incentives.
All parties, from the old populism to neoliberalism and new populism, have exploited Pemex.
Reform Attempts and Current State
The Peña Nieto administration may be remembered for corruption in Pemex, but it also implemented a reform to rectify the petrolier company’s course. However, López Obrador’s retrograde vision has shifted Pemex from a productive and profitable enterprise to an urgent rescue effort by the same administration.
The financial plan’s core, as announced by Claudia Sheinbaum’s government, is “financial support for the public Mexican company with guarantees from the Federal Government and financing from development banks.”
This 250 billion pesos “Mexico risk” backing improves Pemex’s credit rating, as recently announced by Fitch Ratings. However, it raises concerns about Mexico’s public finances, still grappling with the irresponsible spending excesses of the previous administration and casting doubt on the country’s credit rating.
Addressing Financial Challenges
For Pemex to regain its footing, genuine restructuring is necessary, extending beyond the centralization of operations.
Pemex should focus on its core business of oil exploration and exploitation, abandoning the gasoline refining whim and reassessing many petrochemical tasks.
The past six years’ costs, along with debts and the ideological path left by the previous president, make this late for significant changes.
While the regime’s followers can blame their created enemy, neoliberalism, for Pemex’s problems, financial markets demand clarification on the costs to public finances and how they plan to make Pemex viable moving forward.
Key Questions and Answers
- What are the main financial challenges facing Pemex?
Pemex faces significant financial burdens, including a 1.73 trillion pesos government support between 2019 and 2024, high debt levels from past spending, and the need for genuine restructuring beyond centralizing operations.
- How has Pemex’s financial situation evolved under the current administration?
Under the “Fourth Transformation,” Pemex has become a financial burden on the state, requiring substantial government support. The company’s credit rating improved with recent backing but faces ongoing concerns about public finances and the country’s credit rating.
- What steps should Pemex take to regain its footing?
Pemex should concentrate on oil exploration and exploitation, abandon non-core refining activities, and reassess petrochemical tasks. Genuine restructuring is necessary to address high debt levels and past spending excesses.
- How do financial markets perceive Pemex’s situation?
Financial markets demand clarification on the costs to public finances and how the administration plans to make Pemex viable. They question the sustainability of Pemex’s current path and its impact on Mexico’s credit rating.
