Nine states in Mexico will hold gubernatorial elections on June 2, collectively accounting for a third of the debt in entities and municipalities, according to the Ministry of Finance and Public Credit. Despite none of these states currently being on alert due to their debt levels, the high financial cost remains a significant challenge for future administrations. These states include Chiapas, Guanajuato, Jalisco, Morelos, Puebla, Tabasco, Veracruz, Yucatán, and Mexico City.
Local debt has been reduced since 2015 following the Financial Discipline Law. During the pandemic, state governments did not increase their debt levels but utilized available resources to address the crisis. Most state governments have primarily refinanced existing debt rather than acquiring new debt. Additionally, federal funding for major infrastructure projects has played a role in limiting some states’ debt growth but has also led to a decrease in productive investments.
The Financial Discipline Law requires local administrations to settle short-term obligations at least three months before the end of their term. Nearly all states had met this requirement by December except for Yucatán. The Treasury closely monitors the sustainability of state debt with most states deemed not at risk except for Veracruz due to a significant portion of its available resources being used to service financial obligations.
In terms of debt trends, some states have seen reductions in debt balances while others have experienced increases. In nominal terms, Guanajuato
