11/20/2012—Public financial disclosure law reform has advanced in Mexico this month. It promises to expand the Mexican people’s enjoyment of their right of access to public information, which the Organization of American States has recognized as fundamental to the protection of numerous basic human rights.
In early November, President Felipe Calderon signed a measure to reform the country’s Governmental Accounting Act (Ley de Contabilidad Gubernamental). The reformed version of the law imposes prison sanctions of two to seven years, and fines from $6,000 to $3 million USD (1,000 to 500,000 minimum daily salaries), for anyone who wrongly interferes with public funds or patrimony, or who fails to inform a superior of such activities. It also provides for the destitution or removal of any public employee who improperly alters, omits information from, or conceals public accounting records.
To facilitate citizens’ to access to relevant data, and to enable enforceability, the reforms require government entities (federal, state, and municipal) to make spending records from the past six years available to the public at all times. Furthermore, governments may no longer make payments in cash, but rather must utilize bank transfers.
Among the new disclosure requirements, officials will have to justify and provide proof of each public expenditure. They must also furnish more detailed information on health, security, infrastructure, and education spending, including payments forwarded to unions.
The purpose of the reform is to deter corruption and embezzlement of public funds, in reaction to incidents of this nature that have rocked Mexico in recent years. Additionally, the reform comes at a moment when government borrowing is on the upswing, having almost doubled in the past five years (according to the Financial Times, which also points out that, at around 3% of GDP, it remains low in comparison to debt levels of many other industrialized countries).
In one 2005 government accounting scandal, the federal government discovered the state of Coahuila’s attempts to pass off a $34 billion peso debt (approx. $3 billion USD) as a $34 million peso one (approx. $3.4 million USD). In all too many cases, local governments obfuscate transparency by itemizing expenses under vague category headings such as “additional expenditure.”
It is “the opinion of the Mexican people that corruption continues to be one of our country’s and government’s biggest problems,” Calderón emphasized. “We cannot allow public servants gone bad —who are an exception in our government— to commit acts of corruption that stain the reputation of the entire realm of public governance… [nor can we permit them to] enrich themselves personally through their government positions, where they take advantage of legal loopholes to hide pertinent information, and go behind the public’s back to act against its interest.”
Mexican legislators designed the new initiative to expose the spending of each cent of government funds to the “magnifying glass” of public scrutiny, according to Calderón. “Every government official, whether at the federal, state, or municipal level, will now be required to account for the spending of the Mexican people’s every peso and cent, and, thanks to this reform, we citizens will be able to track public funds in a punctual and detailed manner at each and every stage of government activity.”
In order for this law to produce its intended effects, Calderón warned, all public officials and employees must “obey [it] limitlessly, and the citizenry [must] demand honesty, discipline, and transparency in the management of public resources.”
According to the Financial Times, experts around the world “celebrat[e]” the new law. Juan Pardinas of the Mexican Institute for Competitiveness (Imco) commented, “[t]his law should have been passed 15 years ago…[b]ut the fact that it’s finally in place is a very positive step…[It] creates the institutional environment needed to ensure… financial solidity…” The new measure may further serve as another building block to bolster the Mexican government’s strong debt ratings. These have risen in recent decades, as the country has solidified its public finances.
Thompson, Adam. “Disclosure Law Passed on Mexican Finances.” The Financial Times. Nov. 17, 2012. http://www.ft.com/intl/cms/s/0/1c8c2c34-286d-11e2-a335-00144feabdc0.html#axzz2ClsuDY6Y.
Rodríguez, Yadira. “Firma Calderón decreto que reforma Ley de Contabilidad Gubernamental.” W Radio México. Nov. 9, 2012. http://www.wradio.com.mx/noticias/actualidad/firma-calderon-decreto-que-reforma-ley-de-contabilidad-gubernamental/20121109/nota/1793290.aspx.
“Ley modelo sobre el acceso a la información.” Departamento de Derecho Internacional de la Organización de Estados Americanos. (Last visited Nov. 21, 2012). http://www.oas.org/es/sla/ddi/acceso_informacion_ley_modelo.asp.