Tuesday, November 28, 2023

Transfers to inefficient state companies hurt health, education: economist

Government transfers to two inefficient state-owned companies are an obstacle to the allocation of greater resources to sectors such as health and education, according to a think tank budget specialist.

Mariana Campos, coordinator of México Evalúa’s public expenditure and accountability program, told a business conference she was concerned about the government’s allocation of large sums of money to state oil company Pemex and the Federal Electricity Commission.

Money allocated to address their “inefficiency” diverts resources from other areas, she said.

“The cost … of investing in companies that are not efficient is extremely high,” Campos said, adding that the health and education sectors are left with “two measly pesos” each, despite the challenges they face.

“… Thirty per cent of schools have serious infrastructure problems,” she said.

According to a México Evalúa analysis, investment in Pemex – which has more than US $100 billion in debt – will total 381 billion pesos (US $18.4 billion) in 2022, a 20.8% increase compared to this year.

Campos said the government’s absorption of Pemex liabilities is not a bad idea because it could help the state oil company obtain lower interest rates for debt repayment. However, assisting the company without requiring it to undertake reforms and restructure is not the right thing to do, she said.

“It’s a company that perhaps needs to be less integrated,” Campos said, suggesting that its component parts should be broken up. “… The structure [of the company] is still very big …”

With reports from Reforma 

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