"There is no doubt that Mexican overall [oil] production is down and if it continues down, and prices don't continue up to offset that, then there is a huge fiscal crisis pending," the former U.S. central banker said via a video link to a business conference in Mexico City.
Mexico, the world's No. 9 exporter of crude oil and a key supplier to the United States, has seen its oil output taper off from historic peaks in 2004 due to declining yields at its huge but aging Cantarell offshore field.
Former Fed chief says lower production could spark a major fiscal crisis there, points out risks of increased immigration to United States.
State oil monopoly Pemex, which provides more than a third of the country's fiscal revenues, is now aiming to keep oil production at 3.1 million barrels per day for the next few years, down 8 percent from a 2004 peak of 3.38 million bpd.
Faced too with a slide in global oil prices from recent record highs, President Felipe Calderón is working on fiscal reform aimed at boosting Mexico's low tax take and easing its economic reliance on oil exports.
On immigration - another top issue on Calderón's agenda - Greenspan said that, while trade was very open between Mexico and the United States, U.S. policies on the movement of labor were protectionist.
"There is no evidence on protectionism with respect to goods. There is protectionism with respect to people. And from an economist's point of view that is indistinguishable." He said Mexico would suffer from a brain drain as many of its best workers crossed the U.S. border, legally or illegally, and incomes would have to rise in Mexico before the flow of migrants slows.
"There is no way I know of that you are essentially going to prevent people who want to go across a very long border," he said.
"The only real solution to the immigration problem is for capital incomes in Mexico to be brought up."
PEMEX
Alan Greenspan
