Answers emerge. Including offshore private accounts.
Mexico’s public debt-to-GDP of 50% may seem modest by today’s inflated standards, but when it comes to debt, everything is relative, especially if you don’t enjoy the benefits that come from having a reserve-currency-denominated printing press, and if you borrow in a foreign currency that you don’t control.
As the debt load grows, more and more of the States’ financial resources must be used to service it. As El Financiero reports, the cost of servicing Mexico’s debt, despite super-low interest rates globally, has almost doubled in the last five years, and is now higher than it has been at any time since 1990. In fact, according to the Government’s own figures, more state funds will be spent this year on servicing the debt than on all public infrastructure projects put together.
Yet as the government scrimps and scrapes in areas that might actually help to boost economic growth, it’s more than happy to dig deep to fill its own pockets.
A joint investigation by the news website Animal Politico and the NGO Mexicans Against Corruption and Impunity has revealed that, amidst all the budget cuts, the Pea Nieto Government has been using a complex web of shell companies to make hundreds of millions of dollars of public funds, originally intended for public causes such as combating poverty or financing public education, completely vanish.
This post was published at Wolf Street on Sep 11, 2017.