Veracruz restructures municipal debt; 199 municipalities to settle bond issuance inherited from Fidel Herrera's term

A total of 199 out of 212 municipalities in Veracruz, Mexico, are set to restructure a burdensome debt originating from a 2008 bond issuance. This financial maneuver, initially promoted during the administration of former governor Fidel Herrera Beltrán, had become unmanageable for local governments.

Governor Rocío Nahle García stated that the financing scheme had become unsustainable. Municipalities had already paid over 3 billion pesos towards an original debt of 1.5 billion pesos, with a considerable amount still outstanding. The state government's intervention and resources are crucial to resolving this inherited financial challenge.

The state government announced that with the unanimous backing of the 199 affected municipalities, the legal, technical, and financial process to liquidate the bond issuance has officially begun. This mechanism, described as one of the most costly "neoliberal schemes" in recent decades, had tied up municipal federal revenue and hindered investments in public works and basic services.

The restructuring plan, named the "Municipal Financial Sanitation Strategy," involved building consensus among municipalities from various political parties. The process is coordinated between the federal Ministry of Finance and Public Credit and the state's Ministry of Finance and Planning, with a target for formal debt cancellation before the end of July. The state will cover 75% of the debt, and the municipalities will contribute the remaining 25% without interest, aiming to finalize repayment by 2030, six years ahead of the original schedule.

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the financing scheme had become unpayable, as the municipalities had contributed more than 3 billion pesos for an original debt of 1.5 billion pesos. And a considerable amount still remained.