By Mariana Santibáñez
Mexico: Turning point
Mexico’s state finances are set for an overhaul under a new economic reform plan. But short-term borrowing is causing concern
When the the State of Jalisco was selected to stage the 2011
Pan American Games, it was seen as an opportunity to boost the
local economy in this part of western Mexico, the heart of
tequila country and home of Guadalajara. It was a chance to
bring in tourist pesos, modernize local infrastructure, and
perhaps even give the state a shot at hosting the Olympic
Debt default was not on the agenda.
But then in December, the state missed a payment on a 1.4
billion peso ($110 million) loan. Banco Interacciones
– a Mexican bank specializing in the sub-sovereign
sector – had extended the loan, part of the 7.5
billion pesos Jalisco needed to host the event.
The road to Jalisco’s default last year was
strewn with stories of inter-party bickering and fiscal
mismanagement in a system that sorely lacks transparency. The
tale has been repeated,...
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