Mexico launches sovereign oil fund

Jan 02, 2015 12:00 AM

Mexico's sovereign oil fund, created as part of the country's energy reforms, has begun to operate, according to the central bank.

The oil fund for stabilization and development will receive, manage and distribute the revenues from the hydrocarbons sector, transferring funds to the government.

Surplus funds will be channeled into a long-term savings plan for future generations, the central bank said in a statement.

The oil fund will finance oil and gas E&P, as well as infrastructure, pensions and research and development projects, bank governor Agustín Carstens told legislators in June.

In testimony before treasury and energy committee lawmakers debating the reform's secondary legislation, Carstens said such funds have proven successful in at least 26 other countries.

Until now, Mexico's government had used oil revenue exclusively for budgetary purposes and not for investment. The fund is reportedly modeled on Norway's sovereign wealth fund, the world's largest and totaling around US$850bn.

Once the fund has reached 3% of GDP, any surplus will be allotted as follows: at least 40% to remain in the oil fund; at least 10% will go to the universal pension fund; 10% to invest in science and technology projects; and another 10% in scholarships and industry connectivity and development projects, Carstens said.

The fund will be a tool for transparency, with which Mexicans will be able to see the origin and destination of the oil and gas revenues it manages.

The fund will issue financial statements, the first at end-January and subsequently each quarter, and has its own website, which is here.

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