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Federalists ask that no state receive fewer resources

The governors that make up the Federalist Alliance sent a new letter to President Andrés Manuel López Obrador, in which they propose to postpone the discussion and debate on the Fiscal Coordination System for a few days, “and we will focus at this moment on the 2021 budget, where our position is that no state in the country can receive fewer resources in real terms than in 2020. ”

To achieve this, the presidents propose the following actions: Make the geographic 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 in the event that the goal of Participable Federal Revenue is not reached, using operating remnants of the Bank of Mexico, or sub-exercises of the PEF 2020 and 2021, and the creation of the Fund for emergency health care Covid-19 in states to compensate impact generated by expenses.

In the letter, the governors recall that in recent months, the Federalist Alliance has made various proposals with the aim of contributing to the debate on the management of the Covid-19 Pandemic, “from the point of view of health and financial policies. to mitigate the growth of infections and improve the response capacity of our health systems. “

At the same time, they add, they have analyzed proposals to reactivate the economy, take care of employment and protect the productive plant of the states.

“We have also expressed our surprise at the refusal of the Federation 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.”

As a result of the revision of the Income Law and the Federation’s Expenditure Budget Project for the year 2021, they specify in the letter, they made clear their concern with the reduction in Federalized spending for the states for next year .

It is true that the fall in the resources of the participations under the Fiscal Coordination Law responds mainly to the contraction in the Participable Federal Revenue, they mention, as a result of the effects of the Pandemic that exacerbated an economic slowdown that had already manifested since 2019 , “However, said fall brought to the fore the inadequacy of our fiscal coordination system (the fiscal pact), particularly as of the modifications that were made to the share distribution scheme in 2007.”

They indicate that 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 the calculation of economic dynamism and growth, and the collection efficiency of the entities, which has generated a disconnection between the contribution that various states make to the economy, employment and collection of the country and the resources they receive from the Federation.

“The debate on Fiscal Coordination is of primary importance for the financial stability of the states and their future capacity to fulfill their obligations to provide an adequate environment for investment and economic development in their territories. However, a comprehensive reform the National System of Fiscal Coordination will be a longer-term process, which will probably also require the analysis of a fiscal reform that increases the resources available for distribution, “the governors warn in the document.

They predict the fall in federal spending budgeted for next year, which affects practically all the states, with an immediate effect, “to the detriment of state finances that were already severely affected by the effects of the Pandemic in 2020, including a fall expected in the national GDP of between 8 and 10 percent “.

The letter is signed by the ten governors that make up the Federalist Alliance and they also send it with a copy to all the governors, governor and Head of Government of Mexico City.