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Federalist Alliance asks not to reduce budget to states


In an open letter addressed to President Andrés Manuel López Obrador, the Federalist Alliance, made up of 10 opposition governors, asked him to postpone the discussion and debate around the Fiscal Coordination System for a few days and to better serve the 2021 budget together. with the aim that “no state in the country can receive fewer resources in real terms than in 2020. So clear.”

Unfortunately, the fall in federal spending budgeted for next year, and which affects practically all states, will have an immediate effect, to the detriment of state finances that were already severely affected by the effects of the Pandemic in 2020, including a expected drop in national GDP of between 8 and 10 percent ”, they pointed out.

To this end, they propose four actions to be considered in the economic package:

-Make the geographical distribution of pending resources (INSABI, SCT).

-Guarantee the inclusion of specific infrastructure projects that have an impact on the economic reactivation of the states.

-Generate a stabilization fund in the event that the goal of the Participable Federal Revenue is not reached, using operating surpluses of the Bank of Mexico, or sub-exercises of the PEF 2020 and 2021.

-As well as, Creation of a fund for emergency health care COVID-19 in federal entities to offset the impact that Covid-19 expenses had on state finances in 2020 and that the pandemic will continue to have in 2021.

2021 will be an extremely difficult year for state and municipal finances. Having at least the same resources from the federation for the states will make it possible to meet the priority needs of the population in areas such as health, security, education and infrastructure and promote the national economic reactivation.

All the states of the republic will be affected by the proposed fall in federal spending, so this is not a proposal among the states grouped in the Federalist Alliance. It is a proposal that we invite all the states of the country to subscribe ”, they underline.

The document indicates that in recent months the Federalist Alliance has made various proposals with the aim of contributing to the debate around the management of the covid-19 pandemic, from the point of view of health and financial policies to mitigate growth of contagions and improve the response capacity of health systems.

At the same time, we have analyzed proposals to reactivate the economy, take care of employment and protect the productive plant of our states. We have also expressed our surprise at the Federation’s refusal to provide the states with emerging resources to address the severe impact of the pandemic on health systems and local economies, which has put serious pressure on state finances ”, they highlighted.

More recently, and especially as a result of the revision of the Income Law and the draft Budget of Expenditures of the Federation for the year 2021, “we have made clear our concern with the reduction in Federalized spending for the states for the next year, including the reduction of allocations for issues such as infrastructure, security, health and the significant drop in participations and contributions budgeted for 2021 ”.

They recognize that the fall in the resources of the participations under the Fiscal Coordination Law responds mainly to the contraction in the Participable Federal Revenue, as a result of the effects of the Pandemic that exacerbated an economic slowdown that had already manifested since 2019.

However, this fall brought to the fore the inadequacy of our fiscal coordination system (the fiscal pact), particularly as a result of the modifications that were made to the share distribution scheme in 2007 ”, they point out.

These modifications gave a higher prevalence in the formulas for the distribution of resources that the states receive to the population factor, reducing the importance in calculating the dynamism and economic growth, and the collection efficiency of the entities ”, they pointed out.

The governors of Durango, Chihuahua, Jalisco, Tamaulipas, Michoacán, Colima, Coahuila, Guanajuato, Nuevo León and Aguascalientes admit that the debate on Fiscal Coordination is of primary importance for the financial stability of the states and their future capacity to comply with their obligations to provide an adequate environment for investment and economic development in their territories.

However, a comprehensive reform of the National Fiscal Coordination System will be a longer-term process, which will probably also require the analysis of a fiscal reform that increases the resources available for distribution ”, they added.