1. OPPORTUNITIES, ENTRY POINTS AND RESULTS
Lessons from Bank support for the Reform of Mexico’s Ministry of Finance
Mainstreaming E-Government Workshop - Module 3
Fernando Rojas, LCSPS
Washington, DC, April 27, 2005

2. Fiscal Policy-Objectives and instruments
Potential objectives
Instruments
Influence macroeconomic variables such as inflation, production, and employment
Maintain a stable fiscal position over time.
Help to foster savings, investment, and to smooth consumption over the long run.
Improve the quality of human capital.
Promote objectives in regard the distribution of income
Public expenditure, its amount and composition.
Taxes
Subsidies
Public debt administration
Regulation
Reform.

3. Functions of the MoF Principal functions Tasks
Macroeconomic aspects of fiscal policy
Design fiscal policy: Integration of Hacienda Cycle
Management of macro variables: Single Data Warehouse
Prepare and update medium-term vision of fiscal policy
Support budget preparation
Support tax policy
Evaluation of sectoral policies
Public debt
Registration, Accounting, Authorization
Negotiation
Risk and estimation of vulnerabilities
Budget
Preparation of the budget – Use evaluation indicators
Discuss expenditure policies and expenditures with executing agencies
Discuss final version of budget with the Legislative Branch
Execute the budget: Links with Single Accounting Center
Design and management of the cash flow: Links with Treasury and Banks
Treasury
Collect funds into minimum number of accounts
Reduce unutilized funds: links with Banks, Budget, Commitm.
Floating debt management
Tax policy
Tax policy design
Tax expenditure estimates and evaluation
Tax administration
Collection
Tax evasion issues
Accounting
Budgetary and Financing accounting: CCU

4. Functions of the MoF Complementary Functions Regulation
Banking activities
Financial markets: Pilot BPR
Monopoly regulation
Foreign aid management
State procurement
Relationships with public enterprises
Audit
Support Functions
Identify and rationalize processes
Manage the database
Manage personnel
Manage technology

5. Examples of Basic and Advanced Reforms
Area
Basic reforms
Advanced reforms
Accounting
Make the use of Generally Accepted Accounting Principles universal in the public sector
Introduction of double entry accounting, clear registration and provisioning of debt and patrimonial accounting
Expenditure Management
Set maximum expenditure limits
Contract with executing entities the provision of services
Introduce a system of indicators aimed at measuring expenditure efficiency
Manage the floating debt; multi-year planning
Tax Management
Estimate tax evasion
Create the taxpayer account
Regulation
Banking system
Natural monopolies

6. Making Change Happen The Implementation Dilemma
Resistance and Barriers to Change
Psychological
Structural
Cultural and Political
Project
Initiative
Many false starts
Endless preparations
Finger pointing
Frustration and disillusionment
Requests for more resources
Disappointing Results; Change Slow to Happen