MEXICO CITY: Mexico's finance ministry said on Tuesday it will use a financial gain from the central bank's record reserves to fund infrastructure spending in 2016, compensating for a hit to public finances from a sharp drop in oil prices.
The central bank gave the finance ministry nearly 31.5 billion Mexican pesos ($2 billion), the finance ministry said in a statement, from a gain made on the bank's dollar reserves in 2014 due to the Mexican peso's sharp depreciation last year.
Mexican President Enrique Pena Nieto drove up deficit spending during his first two years in office, but the government has cut back spending after a collapse in global oil prices in late 2014.
Mexico's government uses income from the state oil company to fund about one-third of its budget.
A slower pace of infrastructure spending and private investment under a landmark energy reform is expected to crimp growth this year and next in Latin America's No. 2 economy.
Mexico's peso has tumbled further to a record low this year, so the central bank could see another big gain this year to further shore up spending later.
Since the currency's battering during the global financial crisis, when Mexican assets were among the hardest hit, the central bank has amassed record reserves around $196 billion.
In late January, Mexico's central bank called for spending cuts to maintain confidence in government policy as the country braces for an expected slump in emerging market assets in response to moves by the US Federal Reserve toward raising interest rates.
The finance ministry followed the next day with budget cuts for this year, and later announced lower spending next year.
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