Weekly Report - 15 October 2009 (WR-09-41)

MEXICO | Budget. The finance committee of the lower chamber of congress signalled this week that there would be major changes to the government's budget proposals. The dominant Partido Revolucionario Institucional (PRI), which has an effective majority in congress has finally come out firmly against the government's proposal to introduce a 2% sales tax. To make up for the lost revenue, the PRI is likely to raise the forecast for oil prices and increase the fiscal deficit. The current budget forecast for oil prices is US$51 for 2010 and average daily production of 2.5m bpd. Neither forecast looks easy to beat. The revenue side of the budget has to be passed by the lower chamber no later than 20 October. The PRI wants the budget to be more expansionary and keep up federal transfers to the (mostly) PRI state governments.

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