May 26, 2020

IMF urges Mexico to prop up Pemex and sell its non-strategic assets

Mexico, Nov. 5 (EFECOM) .- The International Monetary Fund (IMF) on Tuesday urged Mexico to underpin the financial position of Petróleos Mexicanos (Pemex) and recommended that the state-owned company move forward in the sale of its non-strategic assets.

The review of Pemex's business plan would "underpin its financial position and reduce the risks in its budget," the IMF said in its annual evaluation of the Mexican economy, the Mexican Ministry of Finance said.

In its review, made public by the Mexican authorities, the IMF underlined the need for Pemex to "advance the sale of non-strategic assets" and present plans to reduce operating costs with a view to improving its profitability.

He added that greater cooperation with private companies could also stimulate production and diversify risks.

The IMF said revitalizing the agenda of structural reforms "is an imperative" to promote solid, sustainable and inclusive growth, while highlighting the need to combat corruption and labor deregulation.

The IMF board, which visited Mexico for this evaluation, also appreciated the determination of the Mexican authorities to maintain fiscal discipline although he added that additional measures are needed to achieve the announced objectives.

The agency stressed the need to increase non-oil revenues. He considered that there is scope to strengthen revenue management, rationalize fiscal spending, increase local taxes and make the tax system more progressive.

In this regard, the IMF considered it convenient to create a fiscal council to support the government's commitment to fiscal responsibility while recognizing the solid commitment of the authorities to a prudent fiscal policy.

The Fund acknowledged that Mexico's monetary policy has succeeded in making inflation converge to the target, indicated at 3% per year.

The flexible exchange rate regime has played a key role in allowing the economy to adjust to shocks, the IMF said, noting that although the economy continues to show resilience in a complex international environment "a slowdown in economic activity is observed" .

The agency said it expects a slight acceleration of growth in the short term that will allow an annual GDP variation of 0.4 percent in 2019 as macroeconomic policies become less contractive.

The IMF said that by 2020 a recovery of 1.3 percent growth is projected, based on a strengthening of consumption and despite the weakness in investment.

As part of this evaluation, an IMF team visited Mexico, where it collected economic and financial information and met with authorities in addition to private sector analysts and representatives of civil society.

. (tagsToTranslate) IMF (t) Mexico (t) prop up (t) Pemex (t) strategists

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