Mexico Finance Minister Sees MXN44.6B In Extra Oil Income

sg.biz.yahoo.com Friday March 7, 6:29 AM

MEXICO CITY (Dow Jones)--Mexican Finance Minister Francisco Gil said Thursday that Mexico expects to earn 44.6 billion pesos ($1=MXN11.18) in additional oil revenue this year.

Crude oil prices, pushed up by expectations of war in Iraq and the recent strike in Venezuela, are giving the government additional breathing room in its austere budget for 2003.

Gil said that, based on an estimate of $30.50 a barrel for benchmark West Texas Intermediate, Mexico's export crude basket could be expected to average $23/bbl or $24/bbl during 2003, well above the $18.35 forecast used in this year's budget.

Mexico's crude averaged $27.88/bbl in January, and according to preliminary data, about $28.50/bbl in February. The budget is also based on a projected average export volume of 1.86 million barrels a day.

The Mexican government obtains about a third of its revenue from oil and oil-related fees and taxes.

Gil said at a meeting with tax authorities that petroleum-related income rose 70% in real terms during February from the same month last year.

Mexico reported a budget surplus of MXN9.7 billion in January, backed by an 18% increase in oil income.

Oil income will also be higher in peso terms as the Mexican currency weakens against the dollar.

The peso has mirrored dollar weakness against the euro, and has depreciated more than 18% in the past 12 months, due largely to Mexico's extensive trade and investment links with the U.S.

The recent rise in domestic interest rates, however, should increase the government's debt financing costs, Gil said.

Ministry Web site www.shcp.gob.mx

-By Santiago Perez, Dow Jones Newswires; (5255) 5080-3451; santiago.perez@dowjones.com