Mexico's Financial Performance in 2022 Marked by PEMEX Support
Mexico’s Deputy Minister of Finance, Gabriel Yorio, reported the country’s financial results for 2022 and discussed financial tools to support PEMEX as well as fuel subsidies.
According to the Ministry of Finance (SHCP), fuel subsidies reached MX$396.61 billion (US$21.01 billion) in 2022. Although the government had previously stated that these subsidies would be covered by oil income surpluses, this extra income only reached MX$394.51 billion (US$20.98 billion). The oil income surplus fell MX$2.1 billion (US$111.66 million) short to cover the subsidies granted by SHCP.
From SHCP’s funds granted to PEMEX, MX$288.60 billion (US$15.34 billion) did not directly enter the public treasury through Special Tax on Production and Services (IEPS), while the remaining MX$108.47 billion (US$5.77 billion) was compensated by the collection of Added Value Tax (IVA) and Income Tax (ISR).
PEMEX’s oil income amounted to MX$1.4 trillion (US$74.44 billion), an 18.7% increase compared to 2021 with an MX$394.51 billion (US$20.98 billion) surplus. SHCP’s original oil income surplus projection was MX$535.51 billion (US$28.47 billion), 35.7% more than the actual amount.
SHCP collected MX$6.5 trillion (US$345.62 billion), with a budgetary surplus of MX$422.46 billion (US$22.46 billion). ISR collection saw an 11% increase. According to Yorio, SHCP was able to cover fuel subsidies thanks to oil income and the ISR collection surplus. He also stated that fuel subsidies ensured inflation did not reach 12 or 14% but closed 2022 at 7.8%.
As for President López Obrador’s announcement that the government will carry some of PEMEX’s billions of debt payments in 1Q23, Yorio commented that there was no set mechanism to do so yet. Yorio also reported that PEMEX’s contribution to its shared utility right (DUC) fell from 65% at the beginning of the administration to 40%, as this was one of the financial tools to back the NOC. The decrease in its special tax freed a monetary flow from MX$3 billion (US$159.52 million) to MX$4 billion (US$212.69 million) for PEMEX.
"There is no single way to support PEMEX, we usually help via a mix of both financial and fiscal tools. This is the administration that has supported PEMEX the most and we will continue to do so," said the ministry. PEMEX must pay US$6 billion from its debt in 1Q23 and US$10 billion from its US$105 billion debt in 2023.
Nevertheless, according to the Center for Research in Public Policy (IMCO), PEMEX received federal support of MX$809.8 billion (US$42.45 billion) for capital contributions, tax incentives and other assistance from January to September 2022. “The figure received up until September 2022 is 140 percent higher than the MX$45 billion (US$2.36 billion) originally estimated for all of 2022 in the Federation Expenditure Budget (PEF) for that fiscal year,” reads the report.
Additionally, Yorio stated that government assistance did not affect PEMEX’s credit rating. However, last year Moody’s Investors Service downgraded PEMEX’s credit rating based on its economic prospects due to a negative debt record and economic outlook. According to experts, Moody’s downgrade for PEMEX showed that the oil company would need to depend further on the government to gain much-needed liquidity.