• DOWNTURN: The total transfer of Mexican federal funds to state governments during 2019 has declined in 3.9% between January and September when compared to 2018, according to official data, potentially affecting state budgets dependent on federal help to operate.
• SLOWDOWN: With the Finance Ministry having reduced in September Mexico’s growth outlook to a range of 0.6% to 1.2% for 2019, the shortfall in federal money transferred to the states could be even worse in 2020 if official expectations of growth (1.5% to 2.5%) does not materialize.
• STATES: According to consulting firm Aregional, the Mexican states that could be more affected by the reduction of federal funds are those with a weak tax collection system including states like Guerrero, Tabasco and Morelos where less than 15% of its public funds are locally generated.
• RESTRAINT: “The Finance Ministry could be making the decision that in the face of falling revenues and corruption problems, it prefers to contain spending”, said Enrique Díaz-Infante, an expert at the Centro de Estudios Espinosa Yglesias, a public policy think tank.
