PROJECT INFORMATION DOCUMENT (PID)

CONCEPT STAGE

Report No.: AB3323

Project Name / MX - Effective & Responsive Governance
Region / LATIN AMERICA AND CARIBBEAN
Sector / Central government administration (100%)
Project ID / P106528
Borrower(s) / GOVERNMENT OF MEXICO
Implementing Agency / Secretaria de la Función Pública México
Secretaría de Hacienda y Crédito Público México
Environment Category / [ ] A [ ] B [X] C [ ] FI [ ] TBD (to be determined)
Date PID Prepared / September 18, 2007
Estimated Date of Appraisal Authorization / May 2008
Estimated Date of Board Approval / August 2008
  1. Key development issues and rationale for Bank involvement

In the National Development Plan for 2007-12 the Mexican government commits itself to enhance the “management, processes and results of the Federal Public Administration in order to improve the delivery of public goods and services to citizens.” This commitment is well-chosen, as presently the overall quality and efficiency of public expenditures in Mexico lags behind the performance generally found in OECD countries. Improving the quality of public expenditure will contribute to reduce inequalities between the two worlds of rich and poor in Mexico, removing an impediment to growth and helping the country to “catch up” with its fellow OECD members. In addition, demonstrating government results is particularly important in the context of Mexico’s current Fiscal Reform process.

To increase the efficiency and effectiveness of government programs, and improve accountability to citizens, the government has proposed a new results-based budget framework. That framework is anchored in a new law[1] that establishes a system for performance evaluation, or Sistema de Evaluación del Desempeño (SED). The SED is designed to provide key data on the performance of publicly-financed programs and organizations as inputs to the budget cycle. Those data are of two kinds: (i) data on the quality of public management, which is the focus of a new Programa de Mejoramiento de la Gestión (PMG), and (ii) consolidated data on the impact or effectiveness of public expenditures from program evaluations or other sources. Implementation of the SED will constitute an essential foundation for improvements in the quality and transparency of public expenditures.

There is now a strong commitment in Mexico to increase the effectiveness of government interventions and the efficiency of expenditures. In addition to the National Development Plan and legal framework already in place, the World Bank received an official request from the Secretaria de Hacienda y Crédito Público (hereafter “Hacienda”) for the preparation of a Technical Assistance Loan (TAL) in support of this reform agenda. To date, two identification missions have been carried out to discuss the potential scope and content of the proposed operation with high-ranking officials of the Secretaria de Función Publica (responsible for the PMG) and Hacienda (responsible for budget formulation and a key player in managing the SED). Moreover, this reform agenda has gained the attention of Congress, which is currently debating the same issues. And finally, citizens themselves have voiced demands for access to sectoral performance information.

The Bank’s Country Partnership Strategy for Mexico calls for: “Support to improve macroeconomic forecasting, budgeting, fiscal reporting, and tax administration” in order to meet the national goal of “increasing citizen’s confidence in its institutions, reducing the level of corruption, and giving transparency to public sector management and performance.” As noted in the Country Partnership Strategy Progress Report, while some aspects of the “Strengthen Institutions” pillar have progressed well (e.g., upgrading tax administration systems and the introduction of “transparency innovation awards”), advances have yet to be made in other core areas of public administration.[2] Improving the management efficiency of government departments and agencies, including the introduction of a new framework for results-based budgeting, has been identified as critical to improve the quality of budget and fiscal reporting for stronger accountability of public expenditures.

The World Bank’s dialogue with Government on these issues rests on a solid base of analytic and advisory activities: (i) the Public Expenditure Review (FY04) – the first ever at the national level in Mexico – concludes that efficiency of public expenditures must be improved, (ii) the programmatic poverty analysis (FY04, FY05, FY06) suggests the need to strengthen accountability of service delivery to citizens, (iii) the Institutional Governance Review (FY07) recommends focusing on incentives to produce public goods, and the need for information on sector performance, and (iv) the ongoing Country Procurement Assessment Review (CPAR) is developing recommendations for system improvements. This policy dialogue is closely coordinated with partnering organizations with which the team is in regular communication, including the Inter-American Development Bank (IDB), International Monetary Fund (IMF), Organization for Economic Cooperation and Development (OECD), and Economic Commission for Latin America and the Caribbean (ECLAC). In addition, the Bank is already engaged in the development of two related fee-based Analytical and Advisory Services for the Ministry of Social Development (SEDESOL) and the National Council of Evaluation for Social Development (CONEVAL).

The Bank has engaged the new administration since the start of the political transition (2006), providing sustained support through ad hoc technical inputs, as well as sharing international experiences from Brazil, Canada, Chile, Brazil, the UK, and other OECD countries. Given the considerable design and implementation challenges looming ahead, the proposed TAL will enable a level of engagement beyond intermittent advisory work. In addition, the well-recognized coordination and convening power of the Bank can contribute critical non-monetary support to Mexico’s medium- and long-term vision for performance-based management and budgeting.

  1. Proposed objective(s)

The higher order outcome of this project is to improve the efficiency, quality, and accountability of public expenditures in Mexico.[3]

The project development objective is to introduce performance-based management and budgeting in Mexico, bringing into the budget-setting process and broader public debate rigorous information on the efficiency and effectiveness of federal departments, agencies and programs.

This objective will be achieved via the following:

·  Design and implementation of a system to improve public management in departments and agencies though the Programa de Mejoramiento de la Gestión (PMG)[4]

·  Adoption of a new results-oriented budgetary framework

·  Dissemination of government performance information to the legislature and the public.

  1. Preliminary description

In accordance with the government’s request, a Technical Assistance Loan is proposed. While the team considered as an alternative the use of a series of fee-based services (FBS), these are not well suited to provide support for long-term reforms, and they lack the instruments necessary to finance concrete activities during implementation. The proposed TAL is structured around the following five components:

1-Design and Implementation of a Management Enhancement Program (PMG)

This component will provide technical assistance for the design and implementation of a Management Enhancement Program, starting with a pilot phase and scaling up to 200+ federal organizations. The PMG may include, for example, horizontal systems for consolidated procurement and human resources management across federal departments and agencies.

2- Consolidation of the System for Evaluating Policy and Program Effectiveness

Government counterparts, including Hacienda, requested Bank support for their efforts to consolidate a system to evaluate the effectiveness of federal policies and programs, with special emphasis on institutional strengthening and the design of information flows. This component will include an assessment of the current legal framework and institutional mandates for evaluations, as well as strengthening existing capacity for conducting sound evaluations.

3- Development of an Integrated Information System for Results-Based Management

This component will support the development of institutional arrangements, procedures, and an associated electronic database system to (i) receive information from different sources (e.g., Instituto Nacional de Estadística, Geografía e Informática, impact evaluations, PMG, budget indicators, etc.), (ii) organize and analyze this information, and (iii) produce reports to inform various stakeholders (Hacienda for budget preparation, federal departments and agencies for program improvements, Congress for better-informed policy making, and the general public for increased transparency and accountability).

4- Strengthening the Financial Management System

This component will build on the support already offered by the World Bank (through a fee-based service) to help Hacienda integrate their finance cycle. Specifically, this component will help to bring the Public Accounts System (Cuenta Pública) closer to international standards for assets management and expenditure accounting linked to results.

5- (i) Institutional Strengthening of Central Units and (ii) Monitoring and Evaluation of the Reform Interventions

This component will provide technical assistance to government units in the Secretaría de Función Pública (SFP) and Hacienda for the successful implementation of the project. It will also contribute to developing the organizational capacity necessary to monitor progress and evaluate areas for improvement related to the innovations included in the previous four components.

Preparatory work will be closely coordinated with the following multilateral agencies, with which the team already has close ties: (i) IDB, for their work in supporting Hacienda to develop a new system of indicators; (ii) ECLAC, for their work in training sectors in the use of the logical framework methodology; and (iii) OECD, for their work on comparative analysis of performance-based management and budgeting systems.

  1. Safeguard policies that might apply

No safeguards issues are expected to apply.

  1. Tentative financing

Source: / ($m.)
Borrower / 20
International Bank for Reconstruction and Development / 20
Total / 40
  1. Contact point

Contact: Roberto Adrian Senderowitsch

Title: Social Scientist

Tel: (202) 458-5344

Fax:

Email:

[1] Ley Federal de Presupuesto y Responsabilidad Hacendaria, March 2006.

[2] Country Partnership Strategy for the United States of Mexico FY05-08, January 8, 2007, Report No. 37934-MX.

[3] This outome is fully consistent with two of the primary objectives set forth in the National Development Plan (Plan Nacional de Desarrollo 2007-12). Eficacia y eficiencia gubernamental. Objetivo 4: ‘Mejorar la regulación, la gestión, los procesos y los resultados de la Administración Pública Federal para satisfacer las necesidades de los ciudadanos en cuanto a la provisión de bienes y servicios públicos.’ Objetivo 5: ‘Promover y garantizar la transparencia, la rendición de cuentas, el acceso a la información y la protección de los datos personales en todos los ámbitos de gobierno.’”

[4] Programa de Mejoramiento de la Gestión