...The Federal Entities Revenue Stabilization Fund (FEIEF) guarantees that, in adverse situations, subnationals receive compensation up to a certain level from the Federal Revenue Sharing (FRS) scheme relative to the Federal Revenue Law (LIF) estimates. A temporary decrease in the price of the Mexican crude oil mix would not pressure the Issuer Default Ratings (IDR) of subnational entities currently rated by Fitch Ratings. Nonetheless, given the uncertainty in the oil market, Fitch expects local governments to be prudent in planning and executing their 2015 budgets, in particular during the first half of 2015, since midterm elections might pressure public expenditure. Oil Price Drop Impact Lessened from 2009: The effect of a protracted decrease in the Mexican crude oil mix price could affect the FRS scheme and the federal funding amounts distributed to states and municipalities. However, the expected impact of lower oil prices in 2015 would be quite different from 2009, when oil prices collapsed,...
