Oil Revenues Stabilization Fund of Mexico

Mexico US$ 6 Billion
Established: 2000
Transparency Rating: N/A
View Sovereign Fund Transaction Data
View Asset Allocation		 Origin: Oil
Firm Investment Style: Mixed
Entity Structure: Fund
Population Est.: 116.2 million – 2013
Wealth Per Capita Est.: $52
Summary
The Oil Revenues Stabilization Fund of Mexico is also known as Fondo de Estabilización de los Ingresos Petroleros (FEIP).

Background
Mexico’s government finances are heavily dependent on the petroleum industry. In 2000, the fund was created to lessen the effect on public finances and the national economy when there are declines in oil revenues. The fund receives inflow from a special levy on oil revenues.

The FEIP’s objective is to allow automatic fiscal stabilizers to work in the context of a balanced budget rule. If oil and non-oil tax revenues are below the amount originally envisaged in the budget approved for a fiscal year —due to shocks to economic activity, oil prices or the exchange rate— resources from the Fund can be used to compensate for the short-fall and therefore allowing expenditures to be maintained at the level that was originally envisaged. The Fund is a mechanism to help insure that every year’s Fiscal Budget can be executed as planned

Strategy & Objectives
The fund was created for stabilization purposes, rather than intergenerational savings. The fund invests in short-term money market instruments together with the entire central bank’s foreign exchange reserves.

Governance
Mexico’s Secretariat of Finance and Public Credit formed the Technical Committee to manage operations and governance. They aim to preserve an adequate level of liquidity required for the purpose of the fund. The oil fund’s resources are managed and invested by the Central Bank of Mexico Banco de México.

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