Image credits: Stephen Downes
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News Article

Closure of FND’s FONDO Met with Indignation

By Jan Hogewoning | Wed, 10/07/2020 - 17:12

The decision to terminate the Rural Finance Fund (FONDO) of the National Finance for Agricultural, Rural and Fisheries Development (FND) has been met with outright indignation from representatives of the National Countrymen Confederation (CNC) and the General Union of Workers and Countrymen (UGOCEM). The move was approved yesterday after a heated house of representative’s session in which MORENA deputies voted in favor of shutting down 109 trusts citing a lack of transparency and probable corruption in these institutions. Now, the president has stated that a group of eight officials will be responsible for assessing and making a comprehensive diagnosis of each of the 109 trusts.

El Sud Californiano writes today that while the termination of FONDO does not imply the end of the FND, it takes away more than 40 percent of its loanable assets, from a total of MX$31.9 billion (US$1.48 billion) to MX$19.08 billion (US$887.5 million). This, El Financiero writes, will be a ‘deadly blow’ to the only development bank with a legal mandate to provide credit to agricultural producers. While the fund was not perfect, El Financiero writes, it should be reformed, not closed.

The decision to terminate the 109 trusts came as a shock and has already proven very controversial, but in the case of FND’s FONDO, one of the main criticisms is that this fund actually does not classify as atrust and therefore should not be included in this decision. El Financiero writes that while it was called a fund when it was established in 2002, it is in fact an ‘asset contribution’ which falls under a separate law (FND’s Natural Law, articles 22, 33 and 44). The law stipulates that certain information regarding this fund must be disclosed publicly. El Financiero points out that sufficient information about the fund is public, together with financial indicators that are evaluated by the CNBV. The government’s justification to fight a lack of transparency, therefore, does not apply here, El Financiero writes.

Both El Financiero, and Sud Californiano write that while the government has stated that it intends to continue supporting the different objectives of these trusts, it has not proposed an alternative. The lack of a special budget for 2021 toward these programs adds to this concern, El Financiero states.

The data used in this article was sourced from:  
El Financiero, El Sud Californiano, Mexico Business News
Photo by:   Stephen Downes
Jan Hogewoning Jan Hogewoning Journalist and Industry Analyst

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