The Mexican government’s bailout of the country’s state-owned energy company Pemex does not have major fiscal implications. The costs are manageable and non-recurring, so should not require substantial adjustments to current budget plans. However, it does underscore the fact that the government can no longer rely on Pemex as a cash cow. Against this backdrop, arresting the long-run decline in oil production and broadening the tax base more generally will be critical to fiscal sustainability over the next decade.
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