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Incoming governor of Mexican state Veracruz says bailout needed
October 13, 2016 / 2:07 PM / a year ago

Incoming governor of Mexican state Veracruz says bailout needed

MEXICO CITY, Oct 13 (Reuters) - The oil-rich Mexican state of Veracruz, whose administration has been mired in corruption allegations, will require a financial bailout because of its excessive debts, the incoming new governor said on Thursday.

Opposition allegations that outgoing governor Javier Duarte had presided over misuse of public funds have hurt the federal government, and on Wednesday Duarte resigned to face down the accusations. Duarte has repeatedly denied any wrongdoing.

He ran the state for President Enrique Pena Nieto’s Institutional Revolutionary Party (PRI), though the PRI voted to suspend Duarte’s party membership late last month, anxious to counter allegations it has been soft on corruption.

Miguel Angel Yunes of the opposition center-right National Action Party (PAN), who is due to assume the governorship of Veracruz at the start of December, told local television debt had spiraled under Duarte and the state would need a bailout.

“Veracruz’s debt is unpayable,” Yunes said, noting the debt could exceed 100 billion pesos ($5.18 billion).

The debt load in a number of states has risen sharply in the last few years, though Veracruz, which lies on the Gulf of Mexico, has been one of the worst offenders.

Between 2010, when Duarte took office, and the end of last year, the debt of Veracruz more than doubled to 45.9 billion pesos, according to finance ministry figures.

The opposition says that the real debt is higher. At the end of August, rating agency Moody’s downgraded the issuer ratings of Veracruz, citing a “drastic deterioration” in the state’s liquidity metrics. It gave the state a negative outlook.

Veracruz is one of the most populous states in Mexico with more than 8 million inhabitants. Gang violence has risen sharply in recent months and the opposition has accused Duarte’s administration of allowing impunity to flourish there. ($1 = 19.2900 Mexican pesos) (Reporting by Dave Graham and Veronica Gomez; Editing by Chizu Nomiyama)

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