Helping America Navigate a New Energy Reality

Strangled by low oil prices, Mexico slow on payments

By on 14 Dec 2015 in news, notable posts

(AP) — Getting paid has always been hard for government contractors in Mexico, but seldom has the problem been so bad, as low oil prices are battering government finances.

Analysts and officials said Tuesday the problem has broken out into the open. Government contractors are openly complaining and experts worry the country’s largest construction firm could be nearing bankruptcy.

The head of Mexico’s top business chamber publicly rebuked President Enrique Pena Nieto on Monday, saying that late payments were putting Mexican businesses at risk of failing.

“The late payments and non-payments don’t just put thousands of businesses at risk,” Juan Pablo Castanon said at event with Pena Nieto. “They put at risk the jobs of thousands of families in Mexico.”

The president’s office said it had no response to the comments.

The problem has been broached before, and Mexico’s antiquated bureaucracy has always been slow with payments. In one case, hotels in the southern state of Guerrero complained the government hadn’t paid them for hosting thousands of federal police officers dispatched to the troubled state.

But steep declines in oil prices – the source of about 37 percent of government revenue in Mexico – has battered the Pena Nieto administration and forced cutbacks.

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