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LatinNews Daily - 22 February 2019

In brief: Mexico

* Board members of Mexico’s central bank (Banxico) have expressed concerns regarding the state-owned oil company Pemex’s potential risks to the Mexican economy. According to a report from a meeting which took place on 6 February, but only just made available, most members affirmed that the recent revision of Pemex’s credit rating from 'BBB+' to 'BBB-' by credit rating agency Fitch, as well as other internal factors, had contributed to an increase in uncertainty in the national financial markets which could lead to a contraction of both direct and indirect foreign investment, which could then affect the exchange rate. Banxico board members considered that the current situation presents medium and long-term macroeconomic risks such as an additional deterioration in Pemex’s credit rating and its potential impact on the federal government’s expenses and conditions to access foreign loans. Most Banxico board members agreed that financial support from the Mexican government to Pemex or a reduction of its tax burden which addresses its structural problems while being compatible with previously established fiscal goals could help mitigate risks to the Mexican economy.

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