Given that the impact of the COVID-19 pandemic on the Mexican economy will be greater than expected, the Ministry of Finance (SHCP) is working on a preventive “cushion” that includes private investment in oil and gas projects. The goal is to be proactive and provide a coordinated effort to limit the damage, ministry head Arturo Herrera said.

“Even under the most favorable scenario there will be an impact on the economy,” Herrera warned during his inaugural address at the 83rd Banking Convention held in Acapulco. Herrera explained that besides the damage already done, stress in the transport and tourism sectors is likely to worsen. “We are not waiting for the impact to happen. We are starting now to provide incentives, to create an economic cushion,” he explained.

Among the incentives, the government will provide advance allocations for investment and acquisitions. Herrera said SHCP is already working on incentive programs with development banks to provide additional support to the most-affected sectors.

Hours before the convention started and after a meeting with Governor of Banxico Alejandro Díaz de León, Herrera said all possible scenarios to fight the pandemic are being assessed.

 

Oil & gas projects next

Mexico also will invite private firms to invest in oil and gas projects, Herrera said during the annual financial sector event. According to Reuters, Herrera said the long-awaited energy plan will be unveiled soon, disclosing all projects available. Energy auctions will not be included in the plan. “It’s not just a general outline, we’re going to say that this project here, here and here, this amount and size are open to investment,” Herrera said.

Some of the projects are considered in the US$92 billion investment package presented last week by private energy companies to President’s López Obrador administration. Herrera told Reuters that projects with PEMEX were not viable at the moment, after oil prices last week experienced their sharpest decline since 1991.

Herrera stressed that accelerating spending was a “more efficient” way of stimulating growth than raising spending, and added that PEMEX should spend its budget quickly too. “In this context, we need to make sure that PEMEX is executing its investment program on time and in a clear manner,” he said.