IMPROVING PUBLIC
EXPENDITURE IN
MEXICO
ROLF ALTER
DIRECTOR
PUBLIC GOVERNANCE AND TERRITORIAL
DEVELOPMENT
A healthy budget situation, and
improved budget practices
• Mexico in top category – “close to 3%
deficit; low consolidation requirement”
• Recent reforms have strengthened
budgeting function:
for example:
– More co-ordinated budget process
– Performance budgeting available and used
– Enhanced financial management in lie
ministries
Performance budgeting now
harmonised across government
Does the Central Budget Authority have in place a standard
performance budgeting framework which is applied uniformly
across central government organisations?
No, line
ministries/
agencies have
their own:
8 countries
Yes, but
optional for
line ministries
and agencies:
1 country
Yes, for both
line ministries
and agencies:
18 countries,
incl. Mexico
Yes, but only
for line
ministries:
5 countries
OECD Budget Review of Mexico – reforms need to be
continued and built upon
Mexico has lowest overall public
expenditure in OECD
% of GDP
100%
Public expenditure as a % of GDP (2010)
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
* 2009
Source: OECD National Accounts
There is scope to increase investment in key public services, but
taking care to strengthen expenditure frameworks…
Improving public expenditure in
Mexico: more and better…
Key issues to address include:
1. Addressing the (dis)incentives in the fiscal
transfer system
2. Enhancing value for money in procurement
systems
3. Improving accountability and monitoring in
public expenditure (budget, spending at
sub-national level…)
4. Ensuring high standards of integrity in the
public sector
1. States are crucial actors for more
effective public spending
• Mexico has the
lowest sub-national
fiscal autonomy
among OECD
federal countries
Taxes
User
fees
Grant
Oth
100
90
80
70
• Transparency in
public expenditures
low, though recent
legislation is on the
right track
60
50
40
30
• Incentives and
scope for regional
action are low
20
10
0
DEU
CAN
CHE
USA
AUT
ESP
BEL
MEX
OECD reviews can help identify measures to improve the fiscal transfer system
and its effectiveness in promoting regional growth and quality services
2. Procurement systems can be
strengthened to ensure value for money
• SLIDE TO ADD
3. Accountability and monitoring in
spending helps policy learning
• Concern that public expenditures is not
accountable enough
• And that monitoring and evaluation is not
systematic – does not lead to improved
policies
• In other leading economies, the audit
office now plays key role in ensuring
accountability, value for money and
improved outcomes (e.g. Brazil)
4. Transparency and integrity in the
public sector remains a key challenge
Across OECD, restoring trust is seen as a key prerequisite for economic growth
President Elect announcements show that this is a
priority in Mexico
– Creation of the National Anti-Corruption Commission
– Manifesto for a Democratic presidency
– Making public the list of assets owned by senior
government officials
Integrity needs holistic approach: OECD integrity
framework links diverse facets – lobbying, conflict
of interest, procurement… even political financing)
How can the OECD be useful?
• Strengthening comparative data on
government performance (data on key
indicators for Mexico not always available)
• Support anti corruption efforts with an
Integrity Review
• Follow up on recent reviews of procurement
systems with implementation support
• Examine fiscal transfer system to identify key
reforms; promote competitiveness policies at
state and city level