Mérida, Yucatán — Standard & Poor’s upgraded the city’s financial outlook, taking it from “stable” to “positive” and confirmed the municipality’s mxAA credit rating.
One of the current administration’s first challenges, when it began in 2015, was the city’s newly “negative” rating, said Municipal Treasurer Juan Carlos Rosel Flores. Its adverse report partially stemmed from the city’s loss in court to a street-light company that had sued over a canceled contract.
The S&P report constitutes a judgment on the city’s creditworthiness and can affect the city’s ability to acquire financing with favorable terms.
Rosel Flores said the report reflects the city’s financial discipline.
S&P lauded the administration for showing “greater political and managerial strength with a plan that offers a medium-term vision, derived from the implementation of the Financial Discipline Law.”
The firm adds that “in a favorable economic environment, the financial administration has maintained its commitment to prudent fiscal strategies, laying the foundations for a smooth political transition.”
A new administration will be voted in July 1 and take office in September.
It also emphasizes that Mérida has maintained an adequate policy of rendering accounts and simplifying administrative processes.
During the next 12 to 24 months, the municipality is prepared to maintain manageable deficits despite the external pressures it faces for the payment of litigation in progress and the electoral process of this year, S&P said.
S&P’s auditor also wrote that “we expect tax and non-tax revenues to maintain solid growth, mainly as a result of the continuous updating of the property values and new real estate developments and we hope that Mérida’s own revenues will continue to increase and reach 42 percent of operating income during 2017-2019.” This level, he adds, “compares positively with the municipalities of Gómez Palacios, Durango and León, Guanajuato.”
“Merida, has an average economy. We estimate that your outlook for growth will be higher than the national average and peers such as León, Puebla, Ciudad Juárez and Mazatlán. The city stands out for its quality of life and its low level of insecurity, compared to other municipalities in the country, which has favored the arrival of new investments and its rapid growth,” the rating agency reports.
Source: Press Release