Federal Reserve Bank of Dallas President Richard W. Fisher said he was concerned about Mexico’s falling oil revenues because this trend could affect the government's ability to finance public programs.
Hydrocarbons account for 34 percent of Mexico's public revenues, but petroleum production has fallen 25 percent since peaking in 2004, Fisher said in an address Wednesday to the Mexican Stock Exchange.
"The future ability of the Mexican government to finance its needs in an era of declining petroleum production ... concerns me," Fisher said.
Mexico's tax revenues relative to gross domestic product (GDP) rank at "the lowest levels in Latin America, despite the government's best efforts to increase fiscal revenues," the Dallas Fed chief said.
"It is important to find new ways to maintain a balanced national budget as required by Congress, and to be able to do this without choking off economic growth," Fisher said.
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Mexico has made great strides in dealing with periodic economic crises since 1975, implementing reforms to increase competitiveness, creating an independent central bank and containing inflation, the Dallas Fed chief said.
"The reality is that in many macroeconomic areas, Mexico is in a superior position to the United States," Fisher said.
Deregulation of the telecommunications industry, however, "has not been successful," creating a monopoly "that continues to this day to be a significant structural obstacle for the development of the Mexican economy," the Dallas Fed chief said.
The wave of drug-related violence has also been "a plague" on Mexico, Fisher said.
"The majority of companies in the industrial heart of northern Mexico report that they have been affected directly by organized crime," Fisher said.
"It is a situation that drains Mexico's intellectual capital and productivity, something that the country cannot afford to give itself the luxury of losing," the Dallas Fed chief said.