Mexican President Confident Of Key Reforms in 2013

by
Reuters
Mexican President Enrique Pena Nieto said on Monday he is confident that reforms to shake up state oil giant Pemex and the country's tax regime, key planks of his drive to accelerate economic growth, will be approved in 2013.

Mexican President Enrique Pena Nieto said on Monday he is confident that reforms to shake up state oil giant Pemex and the country's tax regime, key planks of his drive to accelerate economic growth, will be approved in 2013.

"Next year will be the time for all of it to happen from scratch: presenting the initiative, the necessary consensus to back it up and make them happen, and get the required approval," Pena Nieto, who took office on Dec. 1, told Reuters in an interview.

Mexico depends on income from state oil giant Pemex to fund nearly a third of the federal budget, and it has struggled for years to get major tax reforms through a divided Congress.

The country has one of the smallest tax takes in Latin America, collecting revenues worth only about 11 percent of gross domestic product, excluding oil income.

Pemex has struggled to make the most of Mexico's crude oil reserves, and Pena Nieto has pledged to open up the company to more private investment. To make it worthwhile for investors, Pena Nieto believes a constitutional change is needed.

Mexico's constitution stipulates that the right to exploit crude oil belongs to the state, and the new government must find a way of allowing private investors to help find the crude without surrendering control of its natural resources.

"I believe constitutional reform is what enables us to generate the legal certainty for the opportunities of getting Mexico more private investment to develop its energy infrastructure," Pena Nieto added.

He believes the tax and energy reforms are vital to his goal of growing the economy by around 6 percent per year.

That would be virtually triple the average growth rate Mexico saw in the years the conservative National Action Party (PAN) was in power between 2000 and 2012.

Created when Pena Nieto's Institutional Revolutionary Party, or PRI, nationalized the oil industry in 1938, Pemex became a symbol of Mexican self-sufficiency, and many attempts to reform the company have foundered in the past.

Pena Nieto's predecessor, Felipe Calderon of the PAN, failed to win support in Congress for a major reform of Pemex, but did take the first steps towards opening the company up to outside investment, putting out contracts to private firms.

Output at Mexico's largest oil fields fell sharply between 2004 and 2009, although it has since stabilized.