September 7, 2021

Mexican President Andres Manuel Lopez Obrador - Credit: Mexico Government

Mexican President Andres Manuel Lopez Obrador – Credit: Mexico Government

Mexican President Andres Manuel Lopez Obrador said on Monday his government is tackling the debt burden of state oil company Petroleos Mexicanos (Pemex) and hinted he would try to use funds from the International Monetary Fund (IMF) to do so.

Asked at a regular government news conference how his government would help Pemex in the coming months, Lopez Obrador said he “could not say much about the matter” because a process of reorganizing the company’s debt was underway.

The president then made comments that appeared to refer to the recent allocation to Mexico of over $12 billion in special drawing rights (SDRs) from the IMF – the Washington-based fund’s reserve assets – that he has said he wants to use to pay off debt.

“Remember the $12.5 billion that arrived that belong to the public treasury, we want that to be used to pay off debt, but it’s not possible to give information on the subject because of the principles or norms that are established,” he said.

The finance ministry declined to comment on whether Mexico intended to use the IMF money to pay off Pemex debt. The president’s office did not respond to a request for comment.

Lopez Obrador’s desire to use the SDRs to redeem debt has been a bone of contention between him and some officials.

Last week the central bank said the government could use SDRs through exchange operations with the bank to meet foreign currency obligations, feeding debate on whether they could be used in a financial operation.

Pemex at the end of the second quarter had financial debt of over $115 billion. The government is due to unveil its draft 2022 budget on Thursday. The budget has in recent years contained planned tax relief for Pemex.

A Pemex spokesperson had no comment on the president’s remarks. A company source said the oil and gas giant had no plan to refinance its debt in line with Lopez Obrador’s suggestion. 

(Writing by Dave Graham; Additional reporting by Ana Isabel Martinez; Editing by Frank Jack Daniel and David Gregorio)

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