Constitutional Reforms Enacted for Multi-Year Infrastructure Investment Projects

May 14, 2008
Constitutional Reforms Enacted for Multi-Year Infrastructure Investment Projects

On April 9, 2004 the Decree Establishing Rules for Carrying Out Projects to Provide Services was published in the Official Journal of the Federation, which is alsoknown as PPS. This Decree allows the federal government to enter into contracts with private investors on long-term investment projects and service contracts forgovernmental infrastructure projects. In this manner, according to the Decree, the Mexican federal government may engage in PPS investment projects, providinggreater security to investors because governmental budgets will be able to include long-term payment obligations for the current and successive fiscal years. TheDecree, however, was not granted at the constitutional level and was subject to potential challenge. Therefore, on May 7, 2008 an amendment to Article 74 ofMexico’s Federal Constitution was published, wherein the possibility of authorizing multi-year expenses for infrastructure investment projects was specificallypermitted, which allows expenses to be included in subsequent fiscal year budgets. The constitutional reform brings greater security to investors investing in PPSprojects, which will likely mean that Mexico will be able to increase the number of infrastructure projects it does, and should be an important development in thecoming years.

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