Federal Public Administration austerity Measures

On April 23rd, the Decree setting forth austerity measures to be observed by the Federal Public Administration agencies and entities until December 31st, 2020 was published in the Federal Official Gazette.

The relevant measures are mentioned below. Please note that, in general terms, we have respected the wording included in the Decree:

a) Paid leave for those already in this situation due to the coronavirus pandemic will be extended until August 01.

b) Half of the offices shall remain closed, except for those that directly serve the public or those that are essential for the well-being of the people.

c) An effort will be made to relocate public servants according to priority, to stop leasing buildings, vehicles, warehouses and real estate, among other savings.

d) No employee will be dismissed, but there will be no employee hiring.

e) The salary of senior public officials (from Deputy Directors to the President) will be gradually reduced by up to 25%.

f) Senior public officials will not receive Christmas bonus or any other end-of-year benefits.

g) 75% of the available budget for general services and materials and supplies will not be exercised. The budget for this item amounted to 666 billion pesos so, in terms of the Decree, 500 billion will not be exercised.

h) Ten sub-ministries are cancelled and employment with the same ranking and income is guaranteed to those who will leave those positions.

i) Government actions and expenditures are postponed, with the exception of the following priority programs: Pension for the Elderly Welfare; Pension for the Welfare of Persons with Disabilities; Sowing Life; Support Programme for the Children Welfare, Children of Working Mothers; Benito Juárez Welfare Scholarships; Construction of the 100 Public Universities; School is Ours; Youth Building the Future; Welfare Saving Schemes; Welfare Bank; Free Medical Care and Medicine; Welfare Production; Guarantee Prices; Fertilizer Distribution; Support to Fishermen; National Guard; Felipe Ángeles General Airport; Oil Production; Rehabilitation of the six refineries; Construction of the Dos Bocas refinery; Electricity generation with the modernization of plants and hydroelectric plants; Maintenance and conservation of roads; Labor roads; Rural roads; Roads under construction; Mexico City airport system; Mexico-Toluca Interurban train; Completion of dams and canals; Lake Texcoco Ecological Park; Urban Improvement Program; National Reconstruction Program; Mayan Train; Guadalajara Train; Internet for All; Development of the Isthmus of Tehuantepec; Northern Border Free Zone; Los Pinos Cultural Space and Chapultepec Forest; and Defense of Human Rights.

j) The Ministry of Finance and Public Credit will have the necessary resources to comply with the delivery of federal contributions to the states, the payment of payroll, pensions and the amortization and servicing of public debt.

k) Resources from funds or trusts created by agreement or decree of the Executive Branch may not be used without the authorization of the Ministry of Finance and Public Credit. The Ministry of Health, the National Guard, and the Ministries of the Navy and National Defense shall have exceptional treatment.

l) The Federal Law of Republican Austerity shall be strictly applied.

The Decree also states that 3 million loans will be granted to individuals and small family businesses, and 2 million jobs will be created.

For any questions or comments that may arise in relation to the information provided above, please contact any of our partners or associates.

Yours sincerely,

Cannizzo, Ortiz y Asociados, S.C.