The austerity of the new federal government will reach the Mexican states

The cutbacks to public spending contemplated by the new government for 2019, will reach the states of the country, which will have to design more severe budgets in the face of pressures such as the financial cost of its debt and payroll spending.

On average, 90% of the resources with which the entities operate comes from the resources transferred to them by the federal government, but the new administration plans to cut 13% of the resources granted to them through Branch 23 Wage and Economic Provisions.

“The big problem that is observed is the decrease that there will be for Branch 23, because as they are released from the budget they become more important in the total transfer of the states,” said Kristóbal Meléndez, a researcher at the Center for Economic and Budgetary Research (CIEP).

CIEP calculates that when the economic package is released these resources represent 1% of the total income of the states, but when they are included in the state budgets they represent between 6 and 7%.

In addition, as part of the federal government’s readjustment of its programs, states will receive revenue from the concept of contributions (earmarked resources) in the same proportion as a year earlier, considering inflation.