MEXICO CITY (AP) — Mexico said Friday it will cut government spending by $8.4 billion this year because of a drop in revenues due to declining oil prices.
Finance Minister Luis Videgaray said the government will put on hold plans for a high-speed rail project that has been marred by allegations of favoritism.
Mexico has seen prices for its oil fall in recent months from around $100 to $38.42 per barrel. The government relies on oil revenues for about a third of its budget.
The cuts, to be borne mainly by the state-owned oil and electricity companies, are equivalent to about 0.7 percent of Mexico's GDP.
A Mexican firm allied with Chinese companies won the high-speed rail contract in November. They were the only bidders for the proposed railway, which would connect Mexico City with the nearby city of Queretaro. Other potential bidders complained they had not been given enough time to come up with an offer.
The contract award was cancelled just before local media revealed the Mexican firm built a mansion for first lady Angelica Rivera.
Another train project in the Yucatan peninsula has been cancelled.