Search for:

Mexican President López Obrador famously ran on an anti-corruption platform to win last year’s election. He promised that eliminating corruption would save lots of money, and he underlined this commitment to saving money by promising a severe government austerity program. He started by slashing his own salary and those of other high-ranking officials, moving out of the sprawling presidential residence, and starting to fly commercial airlines instead of using the presidential aircraft. On Tuesday of this week (November 19, 2019), he achieved an important next step in his austerity program. On that day, the Secretary of Public Administration published the Federal Republican Austerity Law and amendments to provisions of the General Law of Administrative Responsibilities and to the Federal Budget Responsibility Law in the Federal Official Gazette, which became effective on November 20, 2019.

The Federal Republican Austerity Law regulates and provides for austerity measures to curtail government spending in an effort to curb social inequality, corruption, greed and to reduce waste of national assets and resources.

According to this Law, the open public tender method is the general rule for all acquisitions, leases and contracts. Due to the fact that most government entities have common purchasing needs, the Secretary of Public Function and the Secretary of Treasury and Public Credit will issue general guidelines on centralized government procurement, to obtain products and services of the highest quality and at the lowest price, and the most favorable conditions. Moreover, the Law establishes that government contracts involving influence-peddling, bribery or damaging the public treasury will be declared null and void by a court of law; and internal control bodies are the primary agencies responsible for initiating a proceeding that may result in punishment and compensation for the damage caused by the offenders.

More importantly, this Austerity Law provides that those individuals interested in holding a public office, position or commission, must separate themselves from economic assets and financial interests related to the subject matter or that could impair the ability to perform official duties and responsibilities, and could create a potential conflict of interest. This separation must be evidenced by supporting legal documentation that includes a clause guaranteeing the separation during the individual’s government service and for a period of one year after separation. Furthermore, for ten years after government service, no high-ranking government official or employee having supervised, regulated, or had access to privileged or confidential government information acquired by virtue of the official position or employment, may become employed by, or engage in business or professional activities of private companies. These provisions of course are subject to interpretation.

Additional republican austerity measures include: (i) prohibition on acquiring or leasing luxury cars for transportation or mobility of public officials; (ii) prohibition on using human, material or financial resources for other purposes than public service; (iii) prohibition on contracting savings insurance policy, retirement, pensions and special retirement regimes, whether individually or collectively, as well as private medical insurance, life insurance, or retirement insurance granted in favor of public officials, including any other benefit deliberately created for the benefit of former presidents; (iv) prohibition on office remodeling or acquisition of luxury furniture; (v) prohibition on unnecessary office expenses; and (vi) prohibition on creating trusts or mandates on health, education, law enforcement, social security, or public safety, with the exception of those provided in laws, decrees or international treaties.

Additionally, the Sixth Transitory Article prohibits former presidents from being assigned public officials, civilian personnel or armed forces, paid for with public resources, as well as federal real and personal property or real estate at their disposal. In consequence, these human and material resources must be returned to the corresponding public agencies.

The General Law of Administrative Responsibilities was amended to include in the catalog of serious administrative offenses the following conducts: simulation of legal acts, nepotism, violations of trusts provisions, and use of police, public security or armed forces personnel for personal security.

Finally, Article 61 of the Federal Budget Responsibility Law was amended to establish that, as a result of the implementation of these republican austerity measures, savings will be used in programs of the expenditure executor, or programs established in the National Development Plan, or as the Federal Executive Branch may indicate.

At Baker McKenzie, we are at your service to support in any matter related to this publication, and with any other related matter with the above.




Jonathan Edward Adams heads Baker McKenzie's compliance team in Mexico and is the Global Compliance Practice Group's regional coordinator for Latin America. He has extensive experience in corporate, pharmaceutical and compliance law, having worked seven years in the US and 13 in Mexico and Central America. Jonathan combines a US-based perspective on legal implementation and compliance issues with years of on-the-ground experience in Latin America. He works closely with client commercial teams to implement innovative solutions to legal challenges. He is admitted to practice law in Mexico and two US states.


Lorena is a senior associate focusing on Mexican anti-corruption law in Baker McKenzie's Mexico City office. She currently is a member of the Global Compliance & Investigations and the International Commercial & Trade Practice Groups. Lorena joined the Firm in 2011 and spent more than two years working in the Firm’s Monterrey office.