MEXICO CITY (Reuters) - Mexican President Andres Manuel Lopez Obrador on Tuesday said ratings agencies were punishing Mexico for previous “neo-liberal” policies, after the agencies warned about a possible sovereign credit downgrade due to concerns over state-owned oil company Pemex and economic policy.
“The country is being punished for the neo-liberal policies that were implemented during the last 36 years, which were a complete failure,” said leftist populist Lopez Obrador, who took office on Dec. 1.
“It was an inefficient economic policy ... Neo-liberalism in Mexico is synonymous with corruption and theft.”
Lopez Obrador came to power on a platform vowing to fight entrenched corruption, crime, inequality and poverty, which he said are major scourges that cost the Mexican treasury billions of dollars every year.
His pro-poor policies have helped boost consumer confidence to record levels, but uncertainty over economic policy has been blamed by the central bank for a weaker growth outlook for the year.
S&P on Monday cut its stand-alone assessment of debt-laden Pemex by three notches to ‘B-‘ from ‘BB-‘, pressuring the government to tighten up the firm’s finances after Fitch downgraded its credit in January. Pemex is at risk of losing its investment grade, which could trigger a sell-off in its $106 billion of financial debt.
Moody’s Investors Service said in a report on Tuesday that intensifying violence and crime in Mexico raised concerns about security-related credit risks for companies and economic risks for states and municipalities.
“Increasing insecurity, robbery and travel warnings hurt Mexican companies’ top lines and profitability, and will particularly weaken revenue and margins over the next 12-18 months for the oil industry and hotels and resorts,” said Moody’s Vice President Alonso Sanchez.
S&P said last week put Mexico’s sovereign debt on a negative outlook and said there was a one-in-three chance of a sovereign downgrade in the coming year, although not yet to junk.
The credit rating agency also warned about the credit outlooks of a range of major Mexican financial institutions and companies on Monday, including telecommunications giant America Movil and Coca-Cola Femsa, the world’s largest Coke bottler.
Mexico’s stock market was down half a percent on Tuesday, with billionaire Carlos Slim’s America Movil 1.39 percent weaker and department store Liverpool, also singled out by S&P, down 1.9 percent.
Lopez Obrador said that ratings agencies were not taking into account how much money Pemex and the federal government will save with his push to stamp out corruption.
“That makes the difference,” he said.
Lopez Obrador has repeatedly pledged to revive Pemex.
“The only thing I can reproach, respectfully, is that all this time while Pemex and the Federal Electricity Commission were overrun by corruption, the ratings agencies said nothing,” Lopez Obrador said.
However, S&P and Moody’s last put Mexico on negative outlook in 2016, during the government of former President Enrique Pena Nieto. They later restored the outlook to “stable.”
On Monday, Lopez Obrador again promised to rescue Pemex and the state-run Federal Electricity Commission, which is also heavily indebted.
His government aims to boost Pemex’s oil output, which dropped to just 1.62 million barrels per day in January, the lowest since public records began in 1990.
Last month, Lopez Obrador said his government would inject $3.9 billion into Pemex to strengthen its finances and prevent a further credit downgrade.
Reporting by Anthony Esposito and Diego Ore; Editing by Frank Jack Daniel and Bernadette Baum