The Permanent Commission issued the declaration of constitutionality of the reform in financial discipline matters of states and municipalities on May 6, 2015. On May 26, 2015, the Decree that reforms, supplements and derogates certain dispositions of the Constitution of the United Mexican States (the "Constitution"), in financial discipline matters of states and municipalities was published (the "Decree") in the Official Gazette of the Federation ("DOF"), which entered into force on May 27, 2015. Herein we present a brief summary of such publication.
The legislative process for the approval of the Decree lasted more than 2 years and had its origin in the debts contracted by several states of Mexico. The initiative was originated by the Chamber of Deputies in 2013 and concluded with the approval of 24 states: Aguascalientes, Baja California, Campeche, Chiapas, Chihuahua, Coahuila, Colima, Durango, Guanajuato, Hidalgo, Jalisco, México, Morelos, Nayarit, Nuevo León, Puebla, Querétaro, Quintana Roo, San Luis Potosí, Sinaloa, Sonora, Tamaulipas, Veracruz and Zacatecas. Notwithstanding, the approval and enactment of secondary laws will be pending. There is a time limit of 90 days to issue the Regulatory Law in Fiscal Accountability matters (the "Regulatory Law") and 180 days starting after the Regulatory Law enters into force, for the states to amend the state laws.
Principle of stability of the public finances
Pursuant to the Decree, the principle of stability of the public finances is incorporated in the Constitution and its consideration in the system of planning of democratic development.
Powers of the Congress
The powers of the Congress in public finances matters are strengthened under the argument that public indebtedness of the states is of national interest. The Congress shall be in charge of issuing the terms and conditions of loans or guarantees over the credit of the Nation. It is also in charge of approving such loans and, in its case, of paying the public debt.
Each year, the Congress shall approve the maximal amount of indebtedness, which will be included in the Income Law and will set forth the general terms for the indebtedness of states, municipalities and the Federal District.
Finally, the Congress will set a bicameral commission to analyse the agreements that the states and municipalities desire to execute with the Federal Government to obtain guarantees. In the case of states and municipalities with a high...