President Andrés Manuel López Obrador (AMLO) requested 11 percent more loans from international organizations than the government of Enrique Peña Nieto (EPN). In his first five years in government, AMLO requested loans for seven thousand 168 million dollars; while Peña Nieto went into debt with six thousand 456 million dollars in the first five years of his administration, according to data from the Ministry of Finance and Public Credit (SHCP).
The loans were contracted with institutions such as the Inter-American Development Bank (IDB), the Development Bank of Latin America (CAF); the International Bank for Reconstruction and Development (IBRD) and the International Fund for Agricultural Development (IFAD).
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In total, the current government accumulates a total of 14 loans with these organizations, which belong to the development banking segment, compared to 24 contracted in the last administration.
Verónica Zepeda, an academic at the Banking and Commercial School (EBC), indicated that the advantage of these credits is that the financing cost is lower than what private financial institutions charge.
“The fact that the interest rate they charge is lower than the market rate generates less pressure on public finances,” he told El Sol de México.
He added that these banks usually offer technical advice and training related to the projects and if necessary, they have support for the preparation of the financial information required for the project.
“This significantly reduces project risks and to a certain extent guarantees that the resources are used in the activities or projects for which they were requested,” added Zepeda.
Treasury statistics indicate that the majority of financing contracted in the current six-year term was for social development programs, housing improvements or for financial and digital inclusion. Among them, one stands out with the IBRD for one billion dollars under the concept “Covid-19, financial access policy development loan”, contracted on May 27, 2020.
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In December 2018, the country’s total debt was 10.5 trillion pesos and at the end of the third quarter of 2023 it stood at 14.5 trillion pesos, which is 45.4 percent of the Gross Domestic Product (GDP).
For the remainder of the six-year term, the SHCP’s strategy will consist of debt refinancing and taking advantage of all available resources to strengthen the flagship projects that are still underway.
They inherit debts
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Of the 14 loans acquired, four of them will conclude in the next six-year period, that is, between 2025 and 2030. One of these loans is with the IDB to improve the quality of employment in the country; two more with the IBRD for the modernization of public financial management systems and for water security and resilience for the Valley of Mexico. The latest financing, which will conclude on October 1, 2030, was acquired with IFAD under the concept “Cuenca Balsas Project: reducing climate vulnerability and emissions through sustainable livelihoods.
2023-12-13 11:00:00
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