Is Pemex after the savings?

In the midst of the pandemic, legislators serving the López Obrador regime proposed an initiative in Congress to eliminate the Retirement Fund Administrators (AFORES) and nationalize workers' resources.

It was, of course, a stumbling block that met with widespread rejection and the reality of not having a qualified majority at the time to change the laws.

In April 2024, the ruling majority in Congress approved the creation of the Pension Fund for Well-being, which simply allocated the "unclaimed" resources from the Afores.

And it's a real challenge for populism to be able to get its hands on the 7,528,340.30 million pesos managed by the Afores, according to the report from the National Retirement System Commission.

And especially when there has been such a waste of public resources and when transfers to their welfare programs grow exponentially every year.

It cannot be ruled out that now that they have this artificial supermajority in Congress, they intend to insist on using a portion of those resources for their spending plans.

Among all the regime's spending commitments, one is already a priority due to the financial threat it entails, and it has to do with the world's most indebted oil company.

Petróleos Mexicanos has requested authorization to list debt bonds on the Mexican Stock Exchange that are currently traded.

That's $3.777 billion, which is a mere trifle compared to the $120 billion debt Pemex owes in financial markets and with suppliers.

This is another sham that, beyond addressing the appetite of those seeking high returns from a company that hides its audit information, prefers to lose money on a refinery rather than exploit oil, has lost its status as a productive company to once again become a government appendage, and, above all, is rated junk paper, seems to be paving the way for those abundant retirement funds.

The same note that foreign markets shy away from is the same reference that local investors have, perhaps with the understanding that it is clear here that Pemex's commitments are assumed as a government responsibility, of course.

But on the other hand, it is very costly for public finances to pay such high premiums with the support of an economy that still maintains investment grade status.

However, the transfer of even a portion of that debt would almost automatically result in the loss of the investment-grade privilege.

This is where they can get authoritarian and creative, forcing the use of retirement savings funds in a hybrid of Pemex debt, but with the costs of Mexican sovereign debt.

What would stop the regime from making whatever changes to the laws are necessary to force these types of investments?

Pemex's management has been a disaster for many decades, but the decisions of recent years have ultimately sealed the fate of a financial failure that could drag down public finances.

It's a real challenge for populists to get their hands on the 7,528,340.30 million pesos managed by the Afores, according to a report by the National Retirement System Commission.