Government Expects to Increase Oil Revenues by 2027

The federal government is expected to return to a surplus from oil revenues by 2027, after two years of losses, even though oil revenues are still below the levels recorded in 2018.

According to the projections in the 2027 Economic Package, the federal government's net oil revenue is expected to be US$7.3 billion, according to an analysis by the organization Mexico Evalua.

Net oil revenue refers to the oil revenue received by the federal government minus the subsidies it provides to Petróleos Mexicanos (Pemex) via direct transfers of funds through the Ministry of Energy (Sener).

In 2027, the federal government is projected to receive US$11.8 billion in oil revenues. From this amount, US$4.5 billion in transfers to Pemex is deducted.

Jorge Cano, coordinator of the Public Expenditure Program at Mexico Evalua, stated that, although the federal government projects that transfers to Pemex via Sener will fall to 70% in 2027 compared to the previous year, this budget line item “has a history of being significantly overspent.”

“Although the budget for next year is 81,000 million pesos, if spending exceeds the budget at the same rate as in recent years, it would no longer actually represent a significant decrease, and oil revenue would once again turn negative.”

The expert noted that the executive branch can amend the budget virtually at will, with the sole requirement being to notify Congress when the amendment exceeds 5 percent, which “allows this support fund to be significantly overspent.”