New Finance Rules for States and Municipalities

Palacio Municipal de Mérida, Yucatán (Photo:

States and municipalities can only sign for loans that will be used for productive public investment and their refinancing or restructuring“, stated the Interior Secretariat (Segob) on Tuesday May 26th in an official decree.

The decree creates reforms and provisions to various articles of the Mexican Constitution in areas relating to state and municipal finance regulations.

The decree published in the Official Gazette established that state and municipal governments must take out loans in the best possible market conditions, including decentralized organization, public companies and trusts.

Specifically in states, loans must be guaranteed“.

States are responsible for ensuring public finance stability, with the goal to create favorable conditions for economic and employment growth“, the decree said. The National Development Plan, as well as state and municipal plans, should also be carried out under these principles, Segob said.

Palacio Municipal de Mérida, Yucatán (Photo:
Palacio Municipal de Mérida, Yucatán (Photo:

States and municipalities can take out loans to cover their basic short term needs, without exceeding maximum amounts, only if they comply with the regulations established by congress“.

Short term loans must be liquidated no more than three months before the end of the current governor’s administration and the state government cannot sign contracts for new loans during the last three months of an administration“, Segob added.

In terms of public debt, Congress has the ability to establish laws for states, Mexico City and municipalities to eliminate debt and avoid punishments for public servants who do not comply with their obligations.

States with high levels of public debt must comply with the new regulations in no more than 15 days, including days when Congress is in recess“, Segob concluded.



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