Sheinbaum Proposes New Law to Overhaul Infrastructure Investment in Mexico

Mexico City — The Mexican government has proposed sweeping changes to how the country funds and builds infrastructure, moving away from a system where projects depend on annual budget allocations toward a model that encourages long-term private and social sector investment.

President Claudia Sheinbaum’s administration submitted two legislative proposals to the Chamber of Deputies on March 18, 2026. The first would create the Law for the Promotion of Investment in Strategic Infrastructure for Development with Well-being from scratch, while the second would modify several articles of the Federal Budget and Fiscal Responsibility Law (LFPRH), which governs how public money is spent in Mexico.

Together, the reforms aim to establish a new framework where the state, private sector, and social sector can finance and build long-term projects under common rules and, according to the initiative’s text, with greater legal certainty.

Mixed Participation Schemes

Mixed participation schemes form the core of the proposed model. The law defines these as mechanisms where the public sector collaborates directly or indirectly with the private or social sector to finance, design, construct, operate, maintain, or provide services for strategic projects.

The initiative outlines four main modalities. The first involves long-term contracting, where private or social participants receive periodic payments or fees. The second is mixed investment, where parties share risks, costs, investments, and benefits according to their participation interests.

The third includes schemes regulated by specific laws, such as those in the energy sector. The fourth is open-ended: any other modality determined by the law’s regulations or Treasury guidelines.

Regarding state participation, the initiative establishes that the public sector can hold majority, minority, or equal positions in each project. Its contributions can include cash, in-kind assets, concessions, permits, movable or immovable property, and usage or exploitation rights.

Every project under these schemes must receive approval from the Strategic Planning Council, a new advisory body created by the law, and undergo a cost-benefit analysis assessing its impact on public finances and fiscal risks.

This permanent advisory body, without its own legal personality, would issue non-binding recommendations about long-term vision for strategic investment. Its creation has no direct equivalent in the current legal framework.

Differences from Current Framework

Currently, when the federal government or a state wants to execute an infrastructure project with private participation, it primarily uses Public-Private Partnership (APP) schemes.

While this model has worked for highways and certain long-term projects, the initiative notes that existing laws don’t comprehensively cover investment, co-investment, or financing models that could promote development in sectors like communications, transportation, water, environment and sustainability, energy, urban development, tourism development, industrial parks, healthcare facilities, education, public spaces, and technology.

A key difference between the proposal and the current system involves budget flexibility. Today, starting a contracting process requires sufficient resources in the budget.

The new initiative includes Article 35 Bis of the LFPRH, which would authorize the Treasury Department to allow the start of strategic contracting procedures even without definitive budget sufficiency for priority projects.

Another difference involves shielding projects during fiscal adjustments. The current LFPRH allows cuts to various spending categories when revenues fall.

The proposal establishes that budget adjustments shouldn’t affect social programs or expenses related to development-with-well-being projects.

New Contracts

One of the new law’s central elements involves strategic investment contracts. Under this scheme, the government could sign agreements with legal entities or trusts, including social sector actors, to execute long-term public infrastructure projects.

Contracts couldn’t be shorter than four years and, considering all extensions, couldn’t exceed forty years.

The initiative specifies that each contract must include the capital source and cost, expected performance levels, risk distribution between parties, payment schemes, and conditions for early termination.

Regarding guarantees, developers or contractors must provide backing ranging from 5% to 25% of the investment amount required for construction, and between 50% and 100% of the annual consideration for service provision.

These ranges aim to protect the state against non-compliance while giving private partners certainty about project conditions.

Special Purpose Vehicles

To channel resources toward projects, the initiative introduces Special Purpose Vehicles, legal and financial structures whose sole purpose is to invest in or finance projects contemplated by the law.

These can be established as public or private trusts, mandates, corporations, Investment Promotion Corporations (SAPI), or stock market companies.

A characteristic of these vehicles is their ability to issue fiduciary stock certificates or debt instruments to raise resources in financial markets, always under state guidance and in compliance with securities market regulations.

This opens the possibility for infrastructure projects to be financed, at least partially, through capital markets.

State and municipal governments could also participate in establishing these vehicles alongside the federal government, provided they contribute their own or local resources. This introduces an intergovernmental coordination component not explicitly present in current APP schemes.

Budget Changes

The LFPRH reforms include modifications to budget management. One involves redefining Structural Current Spending: the proposal would exclude constitutional universal social programs, education, healthcare and public security personnel services, and direct physical and financial investment from this concept.

This change would alter the basis for measuring the government’s current spending limit.

Another relevant change affects Petróleos Mexicanos (Pemex). The initiative proposes eliminating the link between fiscal budget balance targets and Pemex’s investment. Currently, this investment counts within the federal government’s fiscal commitments.

Finally, the proposal updates institutional nomenclature: it replaces references to the Public Function Department with those of the Anti-Corruption and Good Government Department, aligning with the cabinet reorganization at the start of the current administration.

The initiative establishes that the new model doesn’t replace mechanisms from previous administrative legislation but can coexist with them according to each project’s nature. The proposal must pass through the ordinary legislative process in the Chamber of Deputies and Senate before becoming law.