‘Acapulco is bankrupt’

Sun, sand and Hollywood stars put Acapulco on the map. Crime, cartels and decapitations sent it to the scandal sheets. Now the granddaddy of Mexican destinations is attracting damaging attention again for a debt so crushing that the municipal government couldn’t pay the severance packages of 500 outgoing police officers. “Acapulco is bankrupt,” new mayor Luis Walton said recently, adding that the debt had soared 394 per cent to $123 million under his predecessor, Manuel Añorve Baños.

The revelations threaten to further ruin the reputation of a city better known for gangland gore. And it’s not the only Mexican municipality confronting problematic public finances and crime. Mexican municipalities now owe a collective $4 billion in debt, according to the federal government, up from almost nothing a decade ago. Analysts attribute it to poor incentives: Mexican mayors serve single, three-year terms with no re-election so they undertake expensive, ornamental projects (like parks and bridges) instead of fixing the waterworks or funding police departments.

How Acapulco spent so much money remains a mystery—Añorve denies the allegations of mismanagement. Little was spent on security, according to Raymundo Díaz, director of an Acapulco human rights group, who says outside the tourist strip patrolled by soldiers are barrios rife with crime and extortion.