World Bank: Mexico’s loan approved plus an offer of another one

World Bank offer Mexico $5.5 billion in loans
December 12 2008

MEXICO CITY

The World Bank and the Inter-American Development Bank say they will offer about $5.5 billion in loans to Mexico in 2009 to help finance infrastructure, development and anti-poverty programs.

The banks say they are helping countries like Mexico weather the current credit crisis and supporting government plans to boost economic activity during the global downturn.

Bank representatives said Thursday that the World Bank will offer as much as $3 billion for a variety of projects.

The IDB will kick in as much as $2.5 billion, with another $1 billion possible.

Much of the money will go to low-income housing, public works, transport and anti-poverty programs.

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World Bank Approves US $17.2 Million for Results-Based Management and Budgeting
WASHINGTON, DC,
December 11, 2008

Available in: Español

The World Bank Board of Executive Directors (WB) approved today a US$17.2 million loan to the Mexican government to implement the Results-Based Management and Budgeting Project, which seeks to improve the quality of public spending in Mexico and to help make budgeting a tool for good government.

The project seeks to promote improvement in federal public administration management, to set in motion a new framework for result-based budgeting and produce high-quality information on performance. This should encourage the administration, government officials and legislative policy makers to employ this information when making decisions, thus significantly improving the efficiency and effectiveness of public spending. It also intends to require ministries and federal entities to provide information to decision makers and the general public about spending programs in a timely, rigorous and accessible manner.

Mexico has made several economic reforms and democratic transformations in its political system since the 1980s and 1990s. However, the reform in public administration has been left pending. This project intends to support the Mexican government in accomplishing this task, with the objective of making public administration more efficient and effective for the benefit of the Mexican people. The idea is to turn quality information into a priority in public spending throughout the whole budgetary cycle, from planning and execution to evaluation and auditing,” said Axel van Trotsenburg, World Bank Director for Mexico and Colombia.

Improved management practices will be created through this program and, consequently, fiscal discipline will receive great support. Resources will be assigned more efficiently by improving the alignment between programs and government policies and focusing on the objectives of the public programs, also generating greater budget transparency and accountability at different levels of government and among those responsible for providing services.

The project consists of five components:

  • Design and implementation of a Management Improvement Program.
  • Development of an Integrated Information System for Results-Based Management and Budgeting (SISED).
  • Strengthening Financial Management for Results-Based Budgeting.
  • Consolidation of Results-Based Budgeting and the Evaluation System.
  • Monitoring and Evaluation of the Performance Evaluation System (SED).

During the last decade, the World Bank has implemented different projects in Mexico which have helped strengthen the State’s capacity for and efficiency and quality of public spending. The discussions we have held with the government have been based on activities involving analysis and consultation which have given shape to the design of this operation,” said van Trotsenburg. “The challenge is to establish a mechanism that ensures that the results of the evaluations are taken into account in the government’s future plans and decision making,” he concluded.

The National Development Plan 2007-2012 establishes clear goals in improving the administration, processes and results of Federal Public Administration, and considers that accomplishing a reform based on modernizing budgeting processes will ensure that public spending is executed more efficiently and more transparently. The Performance Evaluation System (SED) is the legal framework for this initiative.

The SED will provide two types of information on the performance of programs financed by public spending.

  • Consolidation of information on results, impact or effectiveness in public spending, obtained through the evaluation of programs or other sources.
  • Information on the quality of public administration, which is the central point of the Program to Improve Management.

This technical assistance loan is a comprehensive part of the Bank’s commitment to the Mexican government to support results-based management and budgeting. The operation will support the institutional, technical and physical aspects, particularly of the Ministry of Public Administration and the Ministry of Finance and Public Credit, which are responsible for the SED, and will act as counterparts to the project. The World Bank will contribute its international experience and knowledge, as it did during the International Conference on Results-Based Budgeting organized together with other international institutions in Mexico City last June.

This project is consistent with the new Country Partnership Strategy that the WB signed with the Mexican authorities last April, which establishes providing support to improve the performance of the institutions and the citizenship’s perception of the public sector through several initiatives, including results-based budgeting.

Nacional Financiera (NAFIN) is the financial agent for the loan, which will be implemented by the Ministry of Finance and Public Credit and the Ministry of Public Administration.

It is a fixed-spread loan with a front-end fee of 0.25 percent and an 18-year grace period. The total amount is to be paid in a single disbursement in 2026.

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