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Jalisco borrows 2.4 billion pesos to pay off debts

January 15, 2013

The State Congress has approved a credit application made by Governor Emilio Gonzalez for 2.4 billion pesos to pay off outstanding debt from the Guadalajara 2011 Pan American Games.

Gonzalez had asked Congress for 3.2 billion pesos in order to pay back an unsecured loan worth 1.4 billion pesos to Banco Interactions and another 400 million pesos owed by the State Sports Commission (CODE) to various suppliers of the Pan American Games.

On Monday night the State Congress’ Finance Committee approved a credit of 2,439,830,553 pesos to be repaid within 20 years, with 12 votes in favor, two against and one abstention. The Finance Committee refused to approve the additional 758 million that Gonzalez had requested because it covered investment in the Athletes Village which should eventually be recouped once the property is sold as apartments.

Last month, Congress had voted to default on the 1.4-billion-peso debt which was due on December 21, leading Fich ratings to downgrade Jalisco’s credit rating from A+ to the lowest grade of D-. Gonzalez vowed to pay off the debt before leaving office on March 1 and implored Congress to approve the credit application this week in order to prevent the next administration from being financially hamstrung.

Gonzalez has now indebted Jalisco more than any governor before him, racking up 15.8 billion pesos of debt during his administration and bringing the state’s total outstanding debt to 18.1 billion.

Both legislators who voted against the additional loan were from the leftist Citizen’s Movement (MC), which has firmly opposed raising the state debt. MC leader Enrique Alfaro had called instead for austerity measures, claiming that the credit would only benefit the outgoing National Action Party (PAN) administration and the incoming Institutional Revolutionary Party (PRI) government, while the public would be straddled with the debt.

“The people must know what is happening, because only through consciousness will we be able to stop the abuses of the PRI and the cynicism of the PAN who want to finish what little remains of our state before retiring, now that they have lost the trust of the people of Jalisco,” Alfaro said on Monday.

Another leftist legislator, Celia Fausto of the Party of the Democratic Revolution (PRD), called for impeachment proceedings “against the Jalisco officials who virtually bankrupted the state.”

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