"Mexico has completed its original oil hedging program for 2014 at a cost of $450 million, but is looking at the possibility of extending it after raising the oil revenue forecast", Finance Minister Luis Videgaray said on Thursday.
"We have covered in principle the level proposed in the budget when it was sent to the Lower House of Congress, of $81 a barrel, and we are evaluating the need and convenience of an additional hedge for the $85 level foreseen in the budget revenue plan," Videgaray told a news conference.
"Mexico's lower house of Congress voted last month to raise the oil revenue estimate in next year's budget to help close a funding gap created by cutbacks to a package of tax hikes proposed by President Enrique Pena Nieto.
Giving final approval to the revenue section of the 2014 budget, the lower house of Congress proposed raising the oil price forecast in the plan to $85 per barrel from $81.
The lower house gave final approval to next year's budget early on Thursday.
It was not immediately clear how much more it would cost to extend the hedge to $85 a barrel.
The budget, which proposes running a deficit in 2014 to lift the struggling economy, dovetails with two cornerstones of Pena Nieto's economic reform drive: the tax revamp and an overhaul of the state-run energy sector.
Congress has just approved the tax bill, and Videgaray said he was hopeful that Congress would approve the energy reform, which seeks to lure investment into the oil sector by offering profit-sharing contracts, by the end of the year.
Lawmakers have said that they are open to considering contracts that offer private companies more, such as production-sharing schemes. Videgaray said it would be up to Congress to decide whether to go beyond the original proposal.
Lawmakers are in the final phase of haggling over a political reform that the conservative National Action Party (PAN) is insisting on in exchange for backing the government energy bill - votes that Pena Nieto will need, given that he lacks a majority in Congress.
The budget for 2014 foresees additional tax revenue, as it includes a package of fiscal measures the government hopes will increase the tax take by around 2.5 percent of GDP by 2018.
The Mexican economy, Latin America's second-biggest, is undergoing its toughest year since 2009, with the central bank forecasting growth of between 0.9 and 1.4 percent in 2013.
The government plans to run a budget deficit of 1.5 percent of GDP next year. In 2014, the central bank sees the economy expanding by between 3 and 4 percent".
Source: Reuters
