© Reuters. Mexico’s President Obrador looks on during a news conference in Mexico City

MEXICO CITY (Reuters) – Mexican President Andres Manuel Lopez Obrador announced a series of what appeared to be mostly modest cuts to the government’s 2019 budget designed to make room for a smaller tax bill for ailing state-owned oil company Pemex.

The president announced the budget cuts in an executive memo released late on Friday, but did not give an estimate for how much the new austerity measures would save.

Finance Minister Carlos Uruzua said in a statement that the savings would be used to “strengthen” Pemex, but did not elaborate.

The measures announced by the president include leaving vacant positions unfilled, less spending on printing and travel for government workers, and stricter limits on which officials can use government-paid chauffeurs.

Lopez Obrador has repeatedly pledged to revive Pemex, which has seen its oil output decline for 14 consecutive years. On Friday he said that “very soon” he would be unveiling a reduced tax structure for the company.

Petroleos Mexicanos, as Pemex is formally known, is the world’s most indebted oil company. The federal government depends on the taxes it pays to fund around 15 percent of its budget.

In recent years, the government has taxed more than 80 percent of the company’s earnings before interest, tax, depreciation and amortization (EBITDA).

Due in large part to its financial debt of some $106 billion, Pemex faces the possibility that its credit rating could be downgraded to so-called junk status, which could trigger a range of adverse consequences including much higher financing costs.

Two of the three major ratings agencies rate Pemex just barely within their investment grade categories, and all three have said a major factor that weighs on the firm’s finances is the high level of taxation levied on it by the government.

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