Carstens Says Oil Will Help Mexico Increase Government Spending

(Bloomberg) — Mexican Finance Minister Agustin Carstens said higher oil prices will allow the government to increase spending as a slowdown in the U.S. threatens economic growth.

“One factor that will help to counterbalance this is the increase of the oil prices,” he said in an interview at the World Economic Forum’s annual meeting in Davos, Switzerland. “It gives us the possibility to have counter-cyclical fiscal policies.”


Carstens signaled earlier this month he’s likely to cut the government’s growth forecast for this year as the U.S. economy, which buys about 80 percent of Mexico’s exports, skirts recession. Proceeds from state-owned oil company Petroleos Mexicanos will make up 34 percent of the government’s revenue in 2008, he said last year.

The price of crude rose 57 percent last year and climbed to a record $100.09 per barrel on Jan. 3.

“As long as we have more oil revenue, government income grows,” said Carstens. “That gives us the capacity to spend more.”

Bloomberg