New tax breaks planned for Mexico's indebted Pemex

FILE PHOTO: A sign of state-owned company Petroleos Mexicanos (PEMEX) is seen at a gas station in Monterrey, Mexico June 17, 2019. REUTERS/Daniel Becerril/File Photo

MEXICO CITY (Reuters) - The Mexican government will propose an additional tax reduction for heavily indebted state oil company Pemex [PEMEXF.UL] in the nation’s 2020 budget, President Andres Manuel Lopez Obrador said Thursday, the latest measure to strengthen the company.

Lopez Obrador has pledged to revive Pemex, whose $106 billion debt is the largest for any oil company in the world. In June, Fitch downgraded to ‘junk’ the debt rating of the company, whose oil output has declined by about half over the past 14 years, causing its bonds to tank.

“We want to lower Pemex’s tax burden, we are assessing it now. We already did, but now that we’re developing next year’s budget, we can establish the measure,” Lopez Obrador said.

The announcement comes two days after the stormy resignation of Mexico’s former finance minister Carlos Urzua, which shook the economy and left the state oil company in the hands of his successor and former deputy Arturo Herrera.

Reporting by Adriana Barrera; Writing by Rebekah F Ward; Editing by Frank Jack Daniel and Marguerita Choy