CLICK TO SHARE
As the saying goes, "You can't teach an old dog new tricks." Nowhere is this truth more evident than in the recent behavior of the allegedly "reformed" Export-Import Bank of the United States.
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. This use of taxpayer funds raises several questions, not the least of which is why our federal government would subsidize a foreign state-owned company in the first place. There's no good answer.
Moreover, Pemex is in serious financial trouble. It could very well collapse, despite its privileged position in Mexico. A pandemic-induced drop in oil prices combined with years of mismanagement have left Pemex technically insolvent. It's already the world's most-indebted oil company and one of the largest issuers of debt in Latin America.
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.
If you don't see any comments yet, congrats! You get first comment. Be nice and have fun.
CLICK TO SHARE