The federal government’s oil revenues add 21 months in a tailspin

In October of this year, these revenues that the federal government obtains from the sale, production and export of oil, mainly in charge of Pemex, fell 51.9% compared to October 2019, in the period of the first 10 months the fall was of 51.9%, compared to the same period last year.

This means that the federal administration received 182,699 million pesos (mp) less than last year during the January-October period.

From January 2019 to October 2020, different events worldwide have defined the arrival of oil revenues from the sale of the Mexican crude oil mix: depreciation of the peso against the dollar, lower international prices due to lower demand for fuels due to the COVID-19 pandemic, and production cuts from the Organization of the Petroleum Exporting Countries (OPEC), which is debating this Monday and Tuesday whether to maintain its last cut until 2021, instead of at the end of 2020.

This Monday, the oil companies grouped in the Mexican Association of Hydrocarbons Companies (Amexhi) of the private sector cut their production goal for this year, due to the effects derived from the coronavirus pandemic.

Although the decrease in the arrival of oil revenues is pronounced during October (51.1% annually), the worst months of 2020 recorded were April and May with -79.3% and -89.8%, respectively.

“During the first 10 months of 2020, the oil revenues of the public sector fell 42.9% in real terms, derived from the fall in the demand for hydrocarbons as a consequence of the global confinement,” explained Hacienda in a statement.

The drop in the demand for fossil fuels during the pandemic has also affected the arrival of non-oil revenues, since a real annual decrease of 15.3% real per year was reported for the different IEPS taxes charged to gasoline and diesel in October, and a real annual -3.0% in the January-October period, figures from the SHCP need.

Tax revenues did not do well in October either, as in January-October they remained practically the same in real terms as in 2019, presenting a variation of -0.6 percent, the Treasury reported.

In total, the revenues of the public sector, oil and non-oil, fell -0.3% real per year in October, and -4.9% real per year in the period January-October of this 2020.