July 10, 2013
Mexico is on the cusp of opening its energy industry to outside investment as a wide consensus has developed that the constitution must be changed to end the government’s monopoly on production, according to a board member of state-controlled oil producer Petroleos Mexicanos.
The country needs “very deep” reforms to lure investment to its natural gas and crude fields, and proposed changes could be ready by the end of this summer, Hector Moreira, who also is a former official in the country’s Energy Ministry, said today at the Bloomberg Mexico Conference in New York.
Mexico is “on the eve” of much-needed changes that will open the way for faster growth and a stronger currency in the region’s second-largest economy, Gray Newman,
Morgan Stanley’s chief Latin American economist, said today at the event. Officials from JPMorgan Chase & Co. and Grupo Financiero Banorte said they were optimistic that President Enrique Pena Nieto will lead a successful effort at reforms this year.
“This administration doesn’t only have the willingness, but the political power and political capital” to enact the changes, Gabriel Casillas, Banorte’s chief Mexico economist, said at the event. Casillas said he was “very bullish” on the peso, the best-performing major currency against the dollar this year, and that investors hadn’t yet priced in the reforms.
A slowdown in economic expansion is putting pressure on Pena Nieto to gain approval to open the energy industry and change laws to boost tax collection, reforms he says may lift growth to 6 percent. The ruling Institutional Revolutionary Party has the ability to pass the key bills, which will attract investment and bolster Mexican markets, according to Eduardo Cepeda, the senior country officer for JPMorgan in Mexico.
There will be “appetite” for Mexican securities in the second half of the year, Cepeda said.
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