Precautionary spending cut, to mitigate fiscal risks in 2016

Summary

The Finance Ministry (SHCP) announced a public spending cut equivalent to 0.7% of GDP, to preserve the fiscal stability of the country in the light of low oil prices on international markets. On Friday the Ministry announced a spending cut worth MXN124.3bn, prompted by the lower revenues expected from the state sector as a result of the expectation of a prolonged low oil price on international markets, and in order to adopt a precautionary position for public finances in 2016. Pemex and CFE have cut their spending by MXN72bn, representing 58% of the correction, while MXN52bn, the remaining 42%, will come from adjustments in Federal Government departments. Of the latter, 65% of the reduction will come from current spending, with the remaining 35% to be found from investment projects, among other items, by cancelling the plans for a Transpeninsular passenger train and the suspension of the México-Querétaro train project

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