Author: Roberto Ruiz
Citibanamex (“CB”) considers that the price liberalization of the gasoline in Mexico increases the probability of achieving a primary surplus in 2017. Also, it is mentioned in the note published in “El Economista” that it will tend to maintain macroeconomic stability in a complicated environment.
Even though the short term impacts are not minor, this increase will eventually give more stability to the Mexican economy on 2017. CB contemplates that the Mexican Government took a responsible decision by setting the price of hydrocarbons so it can reflect its real cost, despite being an unpopular measure.
For decades, the public price of hydrocarbons has been administratively determined in accordance with the conditions of the global market for oil, political considerations and public finances. Sometimes those measures generated significant distortions in the market and public finances.
They also mentioned that with the liberalization of gasoline, Mexico turns into an economy of free market in which the retail price will reflect the conditions of demand and supply. By this means, investment in the sector will be encouraged.
The above was a brief summary of the note that you can find in the link bellow.
In our opinion, this is a great measure for everyone in a long term basis. The Government, population, national and foreign investors can benefit from the investment in infrastructure to ensure greater competitiveness in hydrocarbon prices through logistical improvements. This will probably enhance an economic stability and currency strengthening, which means is a great business opportunity.
Source with the original content: http://eleconomista.com.mx/finanzas-publicas/2017/01/04/liberalizacion-gasolinas-mayor-probabilidad-que-se-logre-superavit-citi