Reauthorized by Congress in December 2019 with the promise that it would suddenly change its ways and focus its firepower on fighting China, this export credit agency quickly returned to its tired routine of propping up its old and favorite customers, including-very prominently-Petroleos Mexicanos, or Pemex.
Right under Congress' nose, Ex-Im Bank approved $400 million in financing to this Mexican government-owned oil company.
A pandemic-induced drop in oil prices combined with years of mismanagement have left Pemex technically insolvent.
In April, both Moody's and Fitch downgraded Pemex's bond rating to junk status, and the deputy governor of Mexico's central bank recently said that Pemex could become an "Incurable cancer" if its government doesn't address its deep-seated structural problems.
Now, thanks to Ex-Im's decision to extend financing to Pemex, if the company collapses, it will also be a problem for American taxpayers.
Nearly a quarter of Ex-Im's overall exposure is in that sector, so Ex-Im's long-standing connections to the industry-rather than a desire to counter China-are probably why the bank continues to deepen ties with Pemex.
Under President Barack Obama, Ex-Im happily extended the same favors to the foreign oil and gas company.
Thursday, October 1, 2020
Why Are American Taxpayers Propping Up Mexico's Insolvent, Government-Owned Oil Company?
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