11/01/14 (written by cmolzahn) — Mexico’s Institute for Competitiveness (Instituto Mexicano para la Competitividad, IMCO) found in its annual State Budget Report (Informe Presupuestal Estatal 2014) that 12 Mexican states are failing to provide transparency in their budgetary processes. Nevertheless, IMCO General Director Juan Pardinas said that overall, Mexican states and the Federal District (Distrito Federal, DF) have made advancements in the area. The most problematic areas are reporting on the number of public employees and public debt.
Together, Mexican states and the DF received a score of 65%, representing the first positive score in seven years. According to Pardinas, the divide between states receiving positive grades and those receiving negative marks has grown, as a result of changes being made in successful states and others’ failure to make reforms. The worst performing states according to the IMCO study were Michoacán and Guanajuato each with a score of 47%, Baja California (48%), Quintana Roo (49%), and Chiapas (50%). Zacatecas, San Luis Potosí, Durango, Tamaulipas, Baja California Sur, Yucatán, and Veracruz also received failing grades below 60%. Despite being among the failing states once again, Tamaulipas made a substantial improvement over last year, when it was last among Mexican states with a score of 16%. Meanwhile, the states performing the best were Jalisco and Puebla (96%), followed by Colima (92%). Among these, Puebla has made the greatest strides since 2008, with an improvement of 48%. Colima and Jalisco have improved by 37% and 27%, respectively.
Pardinas clarified that, while troubling, it is not the debt that states accumulate that is most concerning, but rather the opacity with which those funds are handled. He said that in a “great majority of the states” contracts are managed with little to no transparency. He added the concern regarding inconsistencies in the awarding of subsidies and other social supports, and that despite an ongoing narrative of austerity such payments continue to grow “without apparent reason.” Moreover, the report lists parts or all of some states’ budgets as being “illegible.”
IMCO recommends a five-point course of action to improve budgetary transparency among Mexican states and the DF. First, it proposes that the National Accounting Coordination Council (Consejo Nacional de Armonización Contable) mandate standardized accounting procedures across states; second, that states adopt best practices in budget procedures; third, that states commit to itemization procedures according to common criteria; fourth, that state congresses see to the existence of and adherence to budgetary laws; and fifth, that state debt be contracted through a public process where banks compete to offer the best financing terms possible.
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