MEF will launch “lifesaver” to the Municipality of Lima and other bankrupt local governments

The head of the Ministry of Economy and Finance, José Arista, reported that they will promote a “lifesaver” to different local governments at the national level in order to improve their management, since “they are bankrupt.” One of them is the Municipality of Limamanaged by Rafaél López Aliaga.

“We are going to strengthen subnational fiscal management. Some local governments are bankrupt, such as the case of Chiclayo, La Victoria, Rímac and the Municipality of Lima. “They need a rescue to revive management and improve the quality of life of the neighbors.”said Arista during the support of the list of legislative powers requested from Congress.

López Aliaga will go into debt for the next five administrations

Following the Government’s decision that allows regional and local governments with a credit rating equal to or greater than BBB+ to borrow up to three times more than their income, the Fiscal Council considered that the measure is not appropriate because it will affect the mayors of the next 20 years.

At the end of 2023, the total income of the Municipality of Lima They reached S/1,227 million, so it has a debt margin of more than S/4,000 million.

“The numbers show excessive financing and at the same time relatively expensive. It commits resources for 20 years. The mayor, in the end, is taking advantage of the circumstances and is doing what he thinks (…) resources are committed for the next five administrations, five mayors. To us (Tax Council) the numbers show that it is complicated for the Municipality of Lima.”said Carlos Oliva, then president of the Fiscal Council, at the end of April.

To date, the MML executed S/1,205 million in a first debt issue to prepay debts and finance public works. A second one is expected for S/1,550 million and another for S/1,245 million by 2025.