The rating agency explained that the higher revenues related to oil due to the increase in energy prices will mainly benefit Pemex and will be offset by higher government spending and the government’s commitment to keep gasoline prices stable through direct subsidies. .
“Overall, expected revenue growth will not be enough to offset spending pressures. Fitch expects government spending to increase by 1.2% of GDP compared to the 2022 budget due to an increase in social spending (including pensions) and infrastructure projects such as the Tren Maya and Istmo de Tehuantepec rail projects (0.9% of GDP),” he said.
He added that higher borrowing costs (0.3%) and revenue sharing with income-linked states (0.1%) will also boost spending. However, a reduced need for government support to Pemex may alleviate some pressure on spending.
The government supported Pemex with $13.5 billion (1.1% of GDP) in 2021. Meanwhile, rising borrowing costs, including the capital adjustment of inflation-indexed debt, also put pressure on spending.
