situation report

Mexico: Proposed 2020 Government Budget Hinges on 17 Percent Hike in Oil Production

1 MIN READSep 10, 2019 | 15:48 GMT

What Happened: Mexican President Andres Manuel Lopez Obrador unveiled his 2020 budget proposal on Sept. 8, which expects a 17 percent increase in annual oil production from 2019, Bloomberg reported Sept. 9.

Why It Matters: Although Mexico's state-owned energy firm, Petroleos Mexicanos, has been stabilizing some of its falling oil production numbers, a 17 percent increase appears untenable for Mexico's energy sector. Lopez Obrador's government requires increasing oil revenue to fund a modest spending increase without significantly raising the country's fiscal deficit.

Background: A decline in oil production would make it increasingly difficult for the Mexican government to contain its fiscal deficit within its target range and could force Mexico City to increase borrowing to meet its spending obligations.

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