The approval and forthcoming entry into force Financial Discipline Law for States and Municipalities, promoted by President Peña Nieto, is a long-term measure that will attend the flashpoints in which debt represents more than 100 percent of federal contributions to the state, considered Enrique Guillén Mondragón, president of the National Chamber of the Manufacturing Industry (CANACINTRA).
Guillén Mondragón added that his institution had already stated its grave preoccupation due to the impact on suppliers of lack of payment from state and municipal governments, a debt that rises to more than 120 billions pesos that affects nearly 40 thousand small, medium and large businesses in the country.
“This new legislation is a step in the right direction to create certainty in the use of public state and municipal finances. It is important to recognize that most states administer their financial commitments adequately, and also to underline that this should be replicated all over the country”, he mentioned.
The president of CANACINTRA said that it was undoubtable that the theme would affect some states and municipalities future spending and investing programs and that further transparency would be needed.
“The entry into force of the Financial Discipline Law sends out a positive signal to society on responsibility and long-term vision in debt contracting, as well as its productive uses. In fact, it lays the foundations to increase efficiency and efficient public spending,” he stated.
Guillén Mondragón said that the private industrial sector saw the law as a confirmation of the national public sector’s commitment to maintain the basic conditions that allow avoiding episodes of insolvency and financial uncertainty.
It is also seen by the business sector as a lock that will avoid inadequate incentives to grant loans when the state or municipal conditions are not adequate.
The head of CANACINTRA recognized that “this will avoid pledging future income and expenditure of states, as well as the painful corrections this implies, mainly when these problems are inherited from previous administrations, something to monitor in the next elections in 12 states.”
The entry into force of the Financial Discipline Law sends out a positive signal to society on responsibility and long-term vision in debt contracting, as well as its productive uses. In fact, it lays the foundations to increase efficiency and efficient public spending.”
-Enrique Guillén Mondragón, president of the National Chamber of the Manufacturing Industry