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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: Haim R. Branisteanu who wrote (17864)	12/7/2004 10:01:30 AM
From: mishedlo	Read Replies (1) of 116555

World oil prices are at near-record highs, and Mexico is pumping and exporting more crude than ever before. The country is the world's seventh-largest oil producer and one of the top three suppliers to the U.S., up there with Canada and Saudi Arabia. Yet state oil monopoly Petróleos Mexicanos (Pemex), a giant with $55.9 billion in revenue, is hardly thriving. Indeed, in recent years the company has only been able to make ends meet through massive borrowing, so that it now owes a staggering $42.5 billion, including $24 billion in off-balance-sheet debt. Why? Because Pemex is the Mexican government's cash cow. The state-run company pays out over 60% of its revenue in royalties and taxes, and those funds pay for a third of the federal government's budget. If oil prices drop or there are no major new discoveries of crude, that could spell big trouble for Pemex -- and Mexico's finances. businessweek.com

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