Explaining Borrowing Patterns of Mexican Cities: The Case of the State of Guanajuato

Abstract

Summary:

This paper seeks to describe how and why municipalities in Mexico run up public debt with a particular emphasis on analyzing the circumstances and conditions under which municipalities should resort to indebtedness. More specifically, the paper analyzes when and why municipalities take on debt; the best offers (in terms of interest rates, public or private debt service); the purpose of the loans (investments in infrastructure, economic development, covering operating expenses); and the rates of repayment and/or default. The main objective is to better understand the borrowing patterns of Mexican cities and whether they run up public or private debt.