• INCREASE: Mexican state governments’ short-term debt contracting grew more than 8 times during 2019 in order to cover current government spending levels, after federal government transfers to states fell by 4%, according to Mexico’s Finance Ministry estimates.
• STATES: Total short-term debt contracting by Mexico’s state governments in 2019 was equivalent to USD 1.6 billion and was mostly used to cover salaries, education, health, and even security expenses. The largest borrowers during the past year were Veracruz, Chihuahua and Mexico State.
• EFFECT: “We estimate that the costs of (state governments) debt will remain at the same level even when we see refinancing in most. While refinancing has decreased the financial cost of the debt, it is compensated by contracting short-term debt”, said Roxana Muñoz, an analyst with Moody’s.
• DEBT: In 2018, the Mexican state governments with the largest debt per capita were the northern states of Nuevo León, Chihuahua and, Coahuila (more than USD 631 per capita), according to the latest estimates by the Mexican budget private think tank, CIEP.
