Nuevo León, the only state that improved its level of indebtedness

Nuevo León not only won the battle for the arrival of Tesla, but it was also the only one of the states that were in yellow in the Alert System that improved its level of indebtedness at the end of 2022.

According to the Ministry of Finance and Public Credit, the Financial Discipline Law establishes three short- and long-term debt indicators to measure the Alert System.

The first corresponds to public debt and freely available revenue obligations (ILD), the second to debt service and ILD obligations, and the third to short-term obligations and suppliers and contractors, less the amounts of cash, banks and temporary investments, over total income.

According to the result obtained from the Alert System, the level of indebtedness of the entity is classified into three levels of indebtedness: sustainable (green traffic light), under observation (yellow) and high (red).

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At the end of 2021, six entities were located at a yellow traffic light: Coahuila, Colima, Chihuahua, Durango, Nuevo León and Quintana Roo. The rest were located in green.

Of this group of states in yellow, only Nuevo León reached a sustainable debt level in the last quarter of 2022, whose improvement comes from the decrease in the indicator of public debt and obligations over ILD, from 110.5 to 96.1% in the period of analysis, causing it to go up to a green traffic light.

While the indicator referring to debt service fell from 9.1% of the ILD in 2021 to 8.7% in 2022, although it remained in yellow.

Finally, the indicator corresponding to short-term debt and suppliers also fell from 3.7 to 2.5% of total income, remaining in green.

For Kristobal Meléndez, an economic analyst, Nuevo León was close to going to the green light since 2021, since one of the important indicators for the state is the amount of debt divided by its own income.

“Nuevo León is one of the states with the highest income from participations and has been improving in its debt indicators because it is divided between its own income, which is why they benefit from this dynamism,” he explained.

Liquidity problems

While of the other five states that have remained in yellow, he said that it is because there are other indicators that decrease, such as short-term debt.

For entities that depend on federal resources, scheduling is not enough and they must resort to short-term debt and this is reflected in their remaining at the same level of alert,” said the specialist.

Nuevo León, he deepened, only had one element that kept it in yellow, while the others did not advance due to liquidity problems.

The Alert System is a financial discipline tool that measures the indebtedness of states and municipalities that have contracted financing and obligations.

estados@eleconomista.mx