Mexican high-speed train project suspended 'indefinitely'

Mexico said Friday it had "indefinitely" suspended construction on Latin America's first high-speed train line, nearly three months after scrapping a controversial contract with the Chinese-led consortium chosen to build it.

In early November, the Mexican government pulled the plug on a $3.75 billion deal with the China Railway Construction Corporation and Mexican partners to build a line between Mexico City and the central manufacturing hub of Queretaro.

The deal was scuttled amid criticism that consortium leaders were close with President Enrique Pena Nieto's Institutional Revolutionary Party (PRI), and that the group had faced no opposition when it won the bid.

Mexico announced the 210-kilometer (130-mile) line's suspension Friday, just more than two weeks after reopening bidding.

Mexican Budget Minister Luis Videgaray said the suspension plus other measures would reduce 2015 public spending, in a push to offset falling oil prices.

"We made the decision... to suspend the high-speed Mexico-Queretaro train project indefinitely," Videgaray said.

He pointed to both the project's impact on public finance as well as "pressure on public spending in the coming years, beginning in 2016."

Videgaray said the government would reduce public spending by $8.2 billion in 2015, an amount equal to 0.7 percent of GDP, in order to compensate for falling oil prices.

Almost half the cuts involve state energy firm Pemex, whose spending would be cut by $4 billion.