“Scandalous Overspending: Mexican Army Blows Budget on VIP Projects”

Last year, Mexico's Army significantly overspent its budget, primarily on infrastructure projects. The Defense Department (Sedena), encompassing the army and air force, was initially granted a budget of 112 billion pesos (approximately $6.6 billion) for 2023. However, the actual expenditure amounted to 144 billion pesos, a 29% increase. The Navy, a separate entity, also overspent by 37%, using up 57.5 billion pesos instead of the approved 42 billion pesos.

A significant portion of the extra expenditure was allocated to President Andrés Manuel López Obrador's favored projects, such as the Maya Train and the state airline, Mexicana. Since taking office in 2018, AMLO has utilized the armed forces for infrastructure development, which he views as his legacy. This resulted in a 150% increase in the military budget. Nevertheless, the military's spending exceeded even this increased allocation.

The Maya Train project, which traverses the Yucatan Peninsula, was initially under the National Fund for Tourism Development (Fonatur). However, in September 2023, the project was handed over to Sedena. This led to an increase in expenditure from zero to 10.1 billion pesos (nearly $600 million) by the end of the year, without congressional approval. A further 873 million pesos were spent on the Mexicana airline. Aura Martinez from the Global Initiative for Fiscal Transparency expressed concern over this unplanned spending, stating it undermines the country's budgetary credibility.

Sedena managed to exceed its budget through a process known as amendment, which allows a State Department to alter the budget without requiring congressional approval. Martinez explained that the legislature is only informed about such amendments in rare cases where changes exceed 5% of a governmental power's budget.

Additional funds were also allocated to a program within the Defense Department that supports military presence enhancements and expansions. This program's budget was increased from zero to 11.4 billion pesos. Among other things, these funds were used to modify a ranch into a horse breeding center, costing taxpayers an additional 100 million pesos. Other expenses included 9.4 million pesos for a pig breeding center in Queretaro and 6.8 billion pesos for two Lockheed Martin C-130J Super Hercules aircraft, neither of which were approved by Congress.

Martinez warned that such budgetary inconsistencies could increase the country's financing costs and weaken its economic institutions.