Fitch Ratings upgraded the long-term credit quality rating on the national scale of the state of Veracruz to ‘A-(mex)’ from ‘BBB+(mex)’ and changed the Outlook to Stable from Positive. Moody’s rating agency did the same.
In an interview with El Economista, José Luis Lima Franco, secretary of Finance and Planning of Veracruz (SEFIPLAN), expressed feeling very happy, considering that the improvement in the rating is a reflection of the policies implemented by the state governor, Cuitláhuac García Jiménez , in which austerity, cost containment and financial discipline stand out. Policies that are giving results of improvement in the state’s public finances.
Likewise, he pointed out that the improvement in the rating from ‘BBB+’ to ‘A-‘ shows that the level of debt in Veracruz is not a problem, on the contrary, it is sustainable, “especially because own income has been increasing ”.
José Luis Lima also pointed out that the increase by the Bank of Mexico in the interest rate has not had an impact on the state’s finances either, since they have coverage that guarantees a lower fixed rate.
Regarding the pandemic, the secretary of Finance and Planning of the state highlighted that unlike other entities, Veracruz did not increase its level of debt to face Covid-19, but has been reducing the need for financing year after year.
In this sense, he specified that in 2018, the entity requested 2,500 million pesos, while in 2021, it only requested 1,600 million, a reduction of 36 percent.
As part of the strategy, the secretary mentioned that they have been responsible in the budgets. The state has two deficits, one is due to the issue of pensions, which each year costs the entity 3,300 million pesos; and on the other hand, “the issue of teachers has generated a strong impact due to benefits at the end of each year, which in some way the state subsidizes with about 2,500 million pesos annually.”
“However, we have worked to reduce debt levels and we hope that by the end of this administration we will be able to eliminate these deficits thanks to the policy of not increasing current spending, improving income and working on some schemes hand in hand with the federation. that allows to benefit the income of the entity”.
With the increase in the credit rating, José Luis Lima specified that the state seeks to recover the trust of citizens, companies and credit institutions to attract investment, since in the current administration, efficient use of resources is made.
“That’s the main impact of that improvement on our rating. The impact we seek is in trust and we are achieving it”, highlighted the secretary.
Mainly, the resources invested from doubt have been allocated to infrastructure issues, drinking water to provide several municipalities such as Poza Rica and Xalapa with basic services, as well as rainwater collectors to prevent flooding. Projects for roads, highways, and above all in the health area have also been developed.
In the long term, “we would like Veracruz to begin a period of growth after having cleaned up the finances of previous administrations, on this occasion, we are laying the foundations so that the governments that are to come take advantage of the opportunities to promote the growth of the entity” , he concluded.
