With the new Financial Discipline Law the Mexican state will gain new and better instruments to have healthy public finances, stated President Peña Nieto, adding that stability is a indispensable condition for Mexico to continue moving forward.
During the enactment of the Financial Discipline Law of Federal States and Municipalities, the president stated that with this legislation “Mexico takes a step forward in favor of healthy public finances and the solidity of our economy.”
The law will allow citizens to know the level of debt of local public entities, avoiding state or municipal finances risking the country’s macroeconomic stability by putting a cap on debt and issuing warnings when authorities are abusing resources obtained through credit.
Peña Nieto stated that this follows his administration’s decision to reduce the debt from states, which showed a 14.5 percent increase from 2008 to 2013, which put Mexico’s economic stability at risk.
The head of state mentioned four advantages brought by this legislation: allowing local public finances to be sustainable in the medium and long term, thanks to rules of financial discipline and spending. Establishing an alarm system to make debt levels clear and transparent for all citizens to know. Reducing costs of public debt from states and municipalities, by making all debt-contracting though competitive processes. And finally, establishing requirements and conditions for the governments granting of a federal guarantee for debt contracted by states and municipalities, which will reduce financing costs.
The president concluded that “today we have set an important juridical advance, key and relevant because it establishes favorable conditions for economic growth and the creation of jobs, because in the end stability is the indispensable condition for Mexico to keep moving forward,” the president said.