Government of Michoacán seeks financing to “reactivate the economy and pay off debts” – MonitorExpresso.com

Morelia, Michoacán. – The Congress of the State of Michoacán has turned over to the joint commissions of Finance and Public Debt, and of Programming, Budget and Public Account, the evaluation of a draft decree that authorizes the Executive Branch of the State, through the Ministry of Finance and Administration, to contract financing during 2024 and/or 2025 up to the amount of one thousand 700 million Mexican pesos. This financing, it is assured, will use the Fund of Contributions for the Strengthening of the Federal Entities (FAFEF) as a source of payment, and must be paid before September 1, 2027. Despite the fact that the deputies have already approved the Expenditure Budget of the State of Michoacán for the fiscal year 2024, allocating approximately 2 thousand 636 million pesos for public works in the entity, the current administration of the Government of Michoacán de Ocampo has communicated that it received the public finances of the State in a very compromised situation, facing various financial problems, among which are: “Delays in the payment of salaries of the teaching sector and police workers; delays in transfers and subsidies authorized by the budget to autonomous bodies, the Judiciary and the State Congress, as well as to different agencies, including educational subsystems and the Michoacan University of San Nicolás de Hidalgo; increasing payments in the service of the public debt; various debts with suppliers; non-compliance in the payment of tax contributions and social security contributions before different public entities of the Federal Government and judicial requirements for the payment of debts.” This led the Executive Branch to consider it optimal to take out a loan to “reactivate the economy” through the execution of infrastructure investment projects that will later “create employment” because it will require work in the regions where they are carried out. One of the proposed financing channels is the Fund of Contributions for the Strengthening of the Federal Entities (FAFEF) since according to the Law of Fiscal Coordination the State of Michoacán de Ocampo corresponds to an amount of 2,610,990,827 pesos from which up to 25 percent may be deducted for the “monthly payment of the loan”. provided that it has the authorization of the local legislatures. “The States may affect up to 25 percent of the resources obtained from the FAFEF to guarantee obligations in case of default or serve as a source of payment of the obligations they contract with the Federation, national credit institutions or with natural or legal persons of Mexican nationality,” the ruling specified.

Original source in Spanish