HR Ratings ratified the “HR BBB” rating with a stable outlook for the municipality of IxtapalucaMexico state.
According to a report sent to the Mexican Stock Exchange BMVthe ratification is due to the fiscal behavior observed at the end of 2021, where a deficit was registered in the primary balance (BP) equivalent to 12.5% of total income (IT) (against the expected 3.8% deficit), as a result of higher spending on public works, financed with the use of the liquidity that the municipality had at the end of 2020.
Likewise, part of this liquidity was used to reduce its liabilities with Suppliers and Contractors, with which the net current liability (PCN) to Free Disposal Income (ILD) was reduced from 33.8% in 2020, to 8.9% in 2021 .
On the other hand, derived from an extraordinary increase reported in ILD, net debt (ND) to ILD registered a level of 24.0% in 2021 (vs. 30.1% expected).
For the next few years, it is estimated that the municipality will register a balanced BP to IT. With this, added to the reported decrease in liquidity at the end of 2021, it is projected that the DN to ILD will register an average level of 26.6% (against the estimate of 25.9% in the previous revision) and that the PCN to ILD will increase to an average of 20.6% between 2022 and 2024.
The municipality reported in 2021 a deficit in the primary balance, equivalent to 12.5% of total income, when in 2020 a deficit of 0.7 percent was observed.
This was the result of an increase in investment spending, due to a higher amount in movable and immovable property and in public works, as well as in current spending, due to the increase in general services. This deficit was financed through the liquidity that the municipality had.
HR Ratings estimated for 2021 a deficit in the primary balance equivalent to 3.8% of IT, however, public works spending was higher than estimated.
The total debt of the municipality at the end of 2021 was 216.3 million pesos, and was made up of a structured loan through the special FEFOM program with Banobras, as well as a payment agreement with the Social Security Institute of the Mexico state and its municipalities (ISSEMyM).
Due to a reported increase in ILDs, the DN to ILD decreased to 24.0% (against 30.7% expected in the previous review). For its part, the Debt Service (SD) to ILD was 3.5% (against an estimated 3.1%).
The current liabilities of the municipality decreased from 243.3 million pesos in 2020 to 96.6 million in 2021, due to a reported reduction in supplier and contractor accounts, in line with the observed exercise of the entity’s liquidity at the end of the fiscal year. .
With this, the metric of net current liabilities (PCN) to ILD decreased from 33.8% in 2020 to 8.9% in 2021 (against 34.2% estimated in the previous review).
Expectations
HR Ratings projects for 2022 a deficit in the BP equivalent to 0.2% of the IT. This is due to an expected increase in Federal Participations, added to an estimated reduction in investment spending.
However, a deficit result would remain due to a projected decrease in own income. For the next few years, a recovery in ILD is expected, with which the BP to IT would rise to an average surplus level of 0.1% for the years 2023 to 2024.
estados@eleconomista.mx
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