VZCZCXRO6792
PP RUEHCD RUEHGD RUEHHO RUEHMC RUEHNG RUEHNL RUEHRD RUEHRS RUEHTM
DE RUEHME #0543/01 0562149
ZNR UUUUU ZZH
P 252149Z FEB 08
FM AMEMBASSY MEXICO
TO RUEHC/SECSTATE WASHDC PRIORITY 0659
INFO RUEHXC/ALL US CONSULATES IN MEXICO COLLECTIVE

UNCLAS SECTION 01 OF 02 MEXICO 000543 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE FOR WHA/MEX LIZ WOLFSON 
STATE FOR EEB/IFD/OMA ANDREW SNOW AND RICHARD FIGUEROA 
STATE FOR PETER MAIER, WHA/EPSC 
 
E.O. 12958: N/A 
TAGS: EFIN PGOV MX
SUBJECT: MEXICO CITY'S RESPONSE TO INQUIRY ON FISCAL 
TRANSPARENCY 
 
REF: SECSTATE 16737 
 
¶1. (U) This cable is Mexico City's response to reftel 
regarding fiscal tranparency in countries receiving USG 
assistance monies. 
 
¶2. (SBU) Mexico has made strides in improving the 
transparency of its federal budget in recent years, but 
significant shortcomings remain.  Mexico publishes its 
federal budget on the internet.  The information is useful 
and appears to be accurate, but the public would benefit if 
it were easier to navigate online and if some sections of the 
budget were further disaggregated.  Moreover, some items are 
excluded from the budget entirely.  Off-budget items include 
several government-run stabilization funds, public trust 
funds, Bank Savings Protection Institute transfers, some 
liabilities associated with road concessions, and 
infrastructure investment in the petroleum and electricity 
sectors (Pidregas).  Information on off-budget operations is 
reported quarterly and is included in the government,s 
macroeconomic framework through the Public Sector Borrowing 
Requirements and the Historical Balance of the Public Sector 
Borrowing Requirements indicators. 
 
¶3. (U) The IMF completed a Report on the Observance of 
Standards and Codes (ROSC) on fiscal transparency in August 
¶2002.  The report can be found on the IMF,s webpage: 
http://www.imf.org/external/np/rosc/rosc.asp. 
 
¶4. (U) The Latin American Budget Transparency Index, 2007, 
gave budget transparency in Mexico a 50 -- where 0 is "not 
transparent" and 100 is "completely transparent" -- down from 
54 in 2005.  Mexico fell in 11 of the 14 variables analyzed. 
It was dinged for the following reasons:  a lack of citizen 
participation in the budget process; Congress's inability to 
act as a counterweight to the Executive; and the Secretariat 
of Public Administration's (SFP) inability to properly 
oversee the effective and transparent spending of public 
resources and to sanction corrupt government officials.  On 
the positive side, the evaluation applauded the role of the 
National Superior Auditor Office (ASF), how the Federal 
Budget and Fiscal Responsibility Law (2006) increased the 
legislature's participation in the budget process, and the 
Secretariat of Finance and Public Credit's (SHCP) information 
 
SIPDIS 
on macroeconomic criteria.  In order to improve transparency 
and accountability in the budget process, the research center 
in charge of the index (Fundar) recommended giving more teeth 
and resources to the ASF and the SFP, as well as providing 
clear and transparent information on how surplus revenues are 
distributed.  It also recommended that the government 
disclose line-item information so the public can follow every 
stage of the budget process. 
 
¶5. (U) Relevant laws on budget disclosure are as follows: 
parts of the constitution, the Federal Budget Income Law 
(LIF), the Federal Budget Spending Law (PEF), the Federal Law 
for Transparency and Access to Information (LFTAIPG), the 
Federal Budget and Fiscal Responsibility Law (LFPRH), and the 
National Superior Auditing Law. 
 
¶6. (U) The Government of Mexico makes every effort to inform 
international investors and the general public about its 
financial activities.  Monthly and quarterly reports are 
released in a timely fashion on the SHCP's website, often 
accompanied by internal analysis and comments.  Whenever 
there is a significant fiscal policy shift, fiscal 
authorities make themselves available to investors for 
questions, usually in the form of a conference call.  In 
addition, analysts working in the Mexican Government are well 
informed and able to clearly explain available data and 
provide more detailed data when necessary to meet the 
consumer's needs.  The U.S. Embassy in Mexico has productive 
contact with analysts in the SHCP, Secretariat of the 
Economy, Institute of Geography and Statistics (INEGI), and 
Bank of Mexico (central bank). 
 
¶7. (U) Internal comptrollers in federal departments and 
agencies have taken on consulting roles, in addition to 
auditing, investigating and imposing sanctions.  The Mexican 
Chamber of Deputies (lower house) selects a professionally 
qualified and non-political Auditor General to serve for a 
period of eight years. 
 
¶8. (SBU) USAID does not have any programs to strengthen 
Mexico's capacity to develop sound fiscal policies at the 
national level.  USAID's capital markets development program 
targets sub-national entities and promotes sound financial 
 
MEXICO 00000543  002 OF 002 
 
 
management practices, multi-year debt planning, and ongoing 
reporting for transparency in order to improve credit 
quality.  USAID's governance project works with the national 
network of state and municipal information technology and 
public administration officials (CIAPEM).  This project also 
supports inclusive and transparent policy-making at the 
federal and state levels, targeting areas that will improve 
Mexico's competitiveness.  USAID does not have any activities 
in Fiscal Year 2008 to promote accurate disclosure of 
revenues and expenditures in the national budget of Mexico. 
 
¶9. (SBU) The Narcotics Affairs Section (NAS) in the U.S. 
Embassy provides a wide variety of anti-corruption training 
(addressing topics such as ethics, leadership, and 
management), as well as limited equipment purchases for 
Mexican officials affiliated with the Attorney General's 
office (PGR), the SFP, and the Federal Police.  NAS also 
supports a Culture of Lawfulness program, designed to instill 
adherence to public transparency and rule of law, for police 
academies in a number of states, and at the federal level. 
 
 
Visit Mexico City's Classified Web Site at 
http://www.state.sgov.gov/p/wha/mexicocity and the North American 
Partnership Blog at http://www.intelink.gov/communities/state/nap / 
GARZA