The State Secretary of Finance stated that the state’s public finances are protected from the interest rate changes that the Bank of Mexico (BANXICO) announced and also claimed that resources will be able to be allocated to benefit the state’s development.
The state official explained that BANXICO’s board of governors decided to increase the base interbanking interest rate 75 points so as to put it at 7.75% starting on Friday, June 24. From his point of view this is a correct and responsible monetary policy decision due to the current financial international conditions.
Due to the concern that this decision may increase the financial cost of the state’s public debt, Moreno Mexia stated that, fortunately, during the months of February and March, the state administration contracted a process of elements that will allow it to pay a fixed and known rate.
The official stated that the interest rate with the national bank, for a debt of approximately $14,411,000,000 pesos will be kept at a range of 6.95%-7%, despite the interest rate increase that BANXICO announced.
The expected benefit of applying this coverage mechanism will be of $75 million pesos in 2022 and $366 million pesos in 2023, and it could all amount to a benefit of $651 million pesos as long as the contract is valid.
It should be noted, he added, that credit rating agencies have stated that this was a very positive decision to cover the impact that the interest rate increase will have on the state’s debt.
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