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The increase in subsidies to gasoline will limit the dividends received by states and municipalities, which is negative for their credit ratings, warned l & # 39; credit rating agency Moody & # 39; s .
State dividends consist of several federal taxes, including the IEPS for gasoline, and represent one of the major sources of revenue for local governments.
However, from January to May 2018, IEPS gasoline revenues that were distributed to states through holdings, had an 8 percent drop ] compared to the same period of the previous year.
So the existence of these subsidies in 2018 is negative for states and municipalities as it indicates that the federal government continues to delay the full liberalization of gasoline prices, which would provide a flow of income for these places.
And with the extension of fiscal stimulus to the IEPS this year the benefits to governments will be reduced.
"Units account for about one-third of the average total income of Mexican states and lower growth will affect financial performance and may increase liquidity pressures in the sector," he said. said. .
He notes that the financing needs of Mexican states will increase slightly in 2018 which will result in moderate financial deficits equivalent to 1.5% of total revenue.
In this sense, liquidity continues to be one of the main credit challenges, which is why states and municipalities are increasingly dependent on short-term loans to cover their deficits. liquidity.
"Lower revenue growth can also affect debt service coverage levels for secured loans, 98% of which are backed by equity," he said.
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