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Government suspends high-speed train project

By Agencies in Mexico City | China Daily | Updated: 2015-02-02 07:49

Mexico's government has cut its 2015 budget by nearly 3 percent after a drop in global prices hurt public finances, and it is shelving a tainted $3.75 billion high-speed train tender as part of its austerity measures.

Minister of Finance Luis Videgaray announced the decision on Friday, and the pinch will be felt with the high-speed train project.

Videgaray cited plummeting oil prices as one of the main reasons behind the 2015 budget cut of $8.42 billion.

The cut will not affect economic growth projections for the year, he said, though it does entail "definitively canceling" a proposed rail line linking the southeastern Mexican states of Quintana Roo and Yucatan, as well as the suspension of the high-speed train project designed to connect Mexico City, the national capital, with the central state of Queretaro.

The bid to build the high-speed train project, which is expected to cost $3.75 billion for construction and believed to be first of this kind in Latin America if completed, was won by a Chinese-led consortium in November. But the bid was soon canceled by the Mexican government for domestic reasons. Another bidding for the high-speed railway project was reopened in the middle of January.

Videgaray said that the two rail projects were nixed for now "not just because of the impact they would have on public finances in 2015, but above all because of the pressure they would place on public spending in the years following 2016".

Also impacted by the budget cut are Mexico's state owned oil company Pemex, which will see its budget shrink by 62 billion pesos, and the Federal Electricity Commission, which will see a cut of 10 billion pesos.

Xinhua - Reuters - AP

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