Wednesday, October 3, 2012

A spendthrift Yucatán looks for cash anywhere, anyway

MGRR News Analysis -
spendthrift: n
. One who spends money recklessly or wastefully, or who foolishly manages it.
adj. Wasteful or extravagant: spendthrift bureaucrats.
Spanish - despilfarrador.

*Updated Jan. 4, 2013*
Mérida, Yucatán -
The state of Yucatán, which once entertained dreams (albeit short lived) of complete independence from the Republic of Mexico, is a financial mess. Former governor Ivonne Ortega, who's reading for a prominent stage role in the incoming PRI administration of Enrique Peña Nieto, is largely responsible.

Yucatán's long term debt skyrocketed under her freewheeling management (State and municipal debt continue to rise), and last year a thoughtful local student of the subject queried whether the huge burden can ever be repaid (Yucatán's Public Debt: Mortgaging Future Generations?). The state is on the line for three-quarters of a billion dollars. In a nation where the minimum wage is less than $150 a month, that's a lot of pesos.

Sovereign debt affects people's lives in very ordinary ways, no matter what country they live in, for the simple reason that it ties up resources which would otherwise be available for the payment of ordinary trade debt. If you're maxed out on your credit cards, struggling to make minimum monthly payments, other basic obligations may not get paid. Thus, the capital of this state couldn't pay its huge trash bill several weeks ago (Mérida faces "environmental catastrophe," as trash piles up and residents fume), and it's even had to worry about keeping the lights on, as The Yucatan Times reported last month.
As if all that's not enough, some Mérida city buses might be repossessed, after the state government failed to kick in millions of pesos in subsidies to a local transportation alliance. Such events always heavily impact the most marginalized in society, which in this country means the poorest of the poor.

A few weeks ago, MGRR wrote:

"Considering this a state where almost half of the population lives below the poverty line (Increasing poverty and rising state debt result in poor economic report for Mexico), one has to wonder where all the borrowed money is going, and just how it's being spent. Yucatán is a poor state in a yet poor country, and the job market here is one of the very worst in the nation (Yucatán has educated labor force, but no jobs). It doesn't appear that the cash is being used to jump start the local economy."

"Unprecedented spending" by Ivonne Ortega administration, with 30% annual budget overrides
In any case the new PRI state governor, Rolando Zapata Bello, is facing financial realities, unpleasant as those may be (and unpopular as it may make him with well-entrenched bureaucracies). Hopefully he'll meet with success. His just announced conservation measures are basic, to be sure, but he has to start somewhere. Zapata plans to eliminate or cut back on costly government perks, including the use of state vehicles, cell phones and computers, the remodeling of offices, government-hosted social events and myriad other expenses which are inheretly subject to abuse, and which can add up to a lot of pesos during a gubernatorial administration. Zapata is setting a professional tone by leadership, something which was never the strong suit of his career-possessed, "let's just charge it" predecessor.

Perhaps governor Zapata will even be able to offer some cost-saving ideas to his good friend, Mexico's incoming president, who will have a lot more things to worry about than what the Los Zetas are up to in Quintana Roo (Peña Nieto's biggest challenges will be economy and environment, not cartels).

Jan. 4, 2013 - A piece of good news today for Yucatán, although a small one. The new administration of Rolando Zapata says that it has satisfied all current payables left behind by former governor Ivonne Ortega Pacheco. So the state began the new year with a zero balance. But that was past due trade debt, mainly to the state's many vendors and suppliers. Now Yucatán can shift attention to the matter of that three quarters of a billion dollars - or more - in long term public indebtedness. The interest tab is running.

Oct. 15 - Yucatán tourism continues to languish, after "Mayan effect" prophecies fail to materialize
Oct. 11 - Spanish national debt a short step away from junk bond status, reports Standard & Poor's

Money isn't the only problem the city of Mérida and the state of Yucatán are facing these days:
Mérida, Yucatán is the Dengue capital of Mexico, government agencies report
Dengue Fever roars on in Yucatán

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