The impact of falling oil prices on Mexico's government raises fears that major transportation projects under the ambitious National Infrastructure Program (PNI) for 2014-18 could be revised or even scrapped altogether.
Budget cuts for this year and 2016 have already affected some flagship projects, such as the definitive cancellation of the Transpeninsular passenger train and the indefinite suspension of the high-speed Mexico City-Querétaro rail link.
Despite this, Mexico needs to continue expanding and improving its road, port, airport and railroad infrastructure. Progress has been slow, as shown by the fact that the country has only gained three positions - from 68th in 2012 to 65th in 2014 - among the 144 countries in the infrastructure index of the World Economic Forum's (WEF) Global Competitiveness Report.
Road and rail infrastructure came in 52nd and 64th place, respectively, in the latest edition of the WEF report. In terms of airports, Mexico rose one place to 63rd from the previous ranking, while the quality of port infrastructure remained in position 62, although it has advanced significantly since the 2010-11 ranking when it ranked 89th.
The prospect of further budget cuts increases the obstacles currently facing the PNI. While applauding efforts made to improve fiscal discipline, the business sector is also demanding more efficient long-term planning and better project structuring in order to prevent tenders from failing to attract bidders and to avoid problems during implementation.
However, there is optimism about the potential of public-private partnerships (PPPs) for developing highway and other infrastructure projects, as well as about the outlook for financing projects through the capital markets, which could be key in light of the fiscal adjustment.
Although there are many hurdles to overcome, opportunities are there for the taking. With a total of 223 projects worth nearly US$100 billion, Mexico is attempting to reduce its infrastructure shortfall with new highways, roads, bridges, passenger trains, articulated urban transport systems, freight train lines, seaports and airports.
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