Mexico must strengthen the mechanisms of operation and surveillance of public debt, especially that assumed by state governments and municipalities, to improve the growth of the economy, the Mexican Institute for Competitiveness (IMCO) said.
In an analysis of subnational debt assumed by states and municipalities, the IMCO said that between 2007 and 2022, the indicator increased by 89% in real terms.
“For public debt to have positive and productive results, it is essential that governments, in this case state and municipal, carefully plan, manage, and supervise this financial resource,” IMCO said.
“The proper management of public debt in our country is a fundamental piece for it to really become a factor of economic growth,” IMCO added.
“Public debt can play a crucial role in the country’s infrastructure development, economic growth, and competitiveness,” IMCO said.
Therefore, the research center suggested establishing minimum bases for debt management and its risks, which at the same time consider contingencies and ensure sufficient resources for debt payments.
“Transparency of sources of income should also be incorporated into investment projects to ensure that the impacts are favorable and figures and proportions of resources used are disclosed,” IMCO explained.
Citing data from the Organization for Economic Cooperation and Development (OECD), IMCO said Mexico’s subnational debt is the second-lowest among OECD member countries with similar economies.
Mexico’s economy, the second-largest in Latin America after Brazil, grew 3.0% in 2022.
