November 14, 2018 / 6:28 PM / a year ago

Mexican Congress may ease Pemex tax burden, says senior lawmaker

MEXICO CITY (Reuters) - The head of the budget committee in Mexico’s lower house said lawmakers were looking at including tax changes in next year’s budget for state-run oil company Pemex [PEMX.UL] to give the company more control over its finances.

FILE PHOTO - A digital LED price sign of state-owned company Petroleos Mexicanos (PEMEX) shows their gasoline prices at a gas station in Monterrey, Mexico, August 8, 2018. REUTERS/Daniel Becerril

Alfonso Ramirez, a member of President-elect Andres Manuel Lopez Obrador’s MORENA party, said in an interview on Tuesday that the incoming government wanted to strengthen Pemex’s finances.

“Possibly this leads us to change its fiscal regime, to grant Pemex greater autonomy in how it operates,” Ramirez said, adding that the government needed to curb its reliance on income from Pemex.

Pemex executives have long complained that the company’s heavy tax burden has prevented it from making enough investments to staunch a 14-year long decline in crude output.

Ramirez declined to provide more details, and said lawmakers were still looking at whether they would include tax changes for Pemex in the 2019 budget. MORENA and its allies have a majority in both houses of Congress.

“Maybe we don’t go as far as we want in the first year, in 2019, but we will follow this trajectory,” he said.


Ramirez said lawmakers were waiting to see the budget proposal of Lopez Obrador’s economic team, but that he was eyeing a fiscal surplus target between 0.5 percent and 0.9 percent of gross domestic product (GDP).

Lopez Obrador’s economic transition team said in late October that the budget would aim for a primary surplus of 0.8 percent of GDP.

“In the range of 0.5 to 0.9 percent we are giving an adequate signal to international markets that financial discipline and fiscal discipline is guaranteed,” Ramirez said.

Ramirez said that key economic budget forecasts were not finalized but lawmakers were looking at the Mexican economy growing by around 2.5 percent to 3 percent next year, an exchange rate MXN= of around 19 pesos per dollar and an average price for Mexican crude "slightly" above $50 per barrel.

Reporting by Michael O'Boyle, Editing by Rosalba O'Brien

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