By Anthony Harrup / Wall Street Journal
Mexico President Enrique Peña Nieto submitted to Congress Monday proposed new laws to increase transparency and tighten controls over debt issued by states and municipalities.
The proposals call for the creation of a registry where local governments make available to the public their debt levels and financial obligations. Loans must be taken out with financial institutions that offer the best market conditions and can only be for investment or for improving the debt profile of the local government in question, Peña Nieto said at an event.
“It doesn’t prohibit states from resorting to debt, but sets out principles and guidelines so that they do it in a much more orderly and responsible way,” he said.
Finance Minister Luis Videgaray said that compared with other countries such as Argentina, Brazil and the U.S., Mexico’s state and municipal debt is low at 2.9 percent of gross domestic product. The problem, he said, was the rapid rate at which it had been growing.
And there are some states with very high levels of debt, or facing financial problems paying suppliers and contractors, he said.