Mexico | Transparency Snapshot

Transparency in Mexico has advanced at an uneven pace. Federal transparency standards do not necessarily apply at sub-national levels and some states have yet to enact transparency laws along the lines of federal legislation. Although information regarding public finances is published periodically, there are areas where information access and accountability still require improvement, particularly in clarity, reach and timing.1

Mexico's federal government depends largely on oil revenue, and this dependency extends to states and municipalities, which count on federal transfers to cover their budget. Mexico's public finances continue to rely on the natural resource sector, as illustrated by the nation's annual oil revenue of about USD $90 billion in 2006 and 2007, accounting for 30-40% of the federal budget.

Mexico is also the 6th largest producer of crude oil and the 10th largest exporter in the world. The World Bank classifies Mexico as an "upper middle-income" country. In recent years there has been strong economic growth, at least partly fueled by oil revenues. But economic inequality remains a problem. The World Bank also estimates that 18 percent of the population lives below the national poverty line.2

Revenue Transparency

The primary source of information about government oil revenues is the annual federal budget, which details the obligations of national oil company PEMEX to the Ministry of Finance, and requires that the company report its income and spending. Quarterly reports of expenditures and taxes are published on the PEMEX and Ministry of Finance websites. These reports are also presented by the Ministry of Finance to Congress, as part of the approval process for the PEMEX budget.

PEMEX also reports to the Securities and Exchange Commission, providing aggregated information on its revenues and disaggregated information on taxes paid to the government. However, due to its monopoly over petroleum operations, PEMEX does not have contracts with the government, which in effect passes regulatory power to the company and further weakens oversight on its operations. Although PEMEX has been invited to join the EITI Board, Mexico has not expressed any interest in joining this process. Corruption and lack of accountability remain a problem of the national oil company, and are entrenched even further by a political culture that ties national pride to the state's firm control of the sector.

The federal government has taken some steps to increase revenue transparency at the local level. Decentralization measures have passed greater responsibility to the states for the delivery of services such as education and healthcare. However, states remain dependent on transfers from the federal government, with 89% percent of state income currently coming from the federation. In a recent ruling, the Supreme Court established that these transfers can be disclosed to the public under the existing Transparency and Access to Information law and monitored by the Supreme Federal Auditor.

Expenditure Transparency

According to the Open Budget Index, the federal government provides the public with "some" information about public spending. This means that the government releases key budget documents to the public-such as the executive's budget proposal, periodical reports, and year-end reports-but does not provide enough information to give the public a "comprehensive picture of the government's financial activity."3

In March 2006 the government passed the Budget and Fiscal Responsibility law, which attempts to make public spending more transparent and disciplined. Article 106 of the law mandates the Executive to disclose information on government expenditures on a quarterly basis. The Ministry of Finance already publishes this information in quarterly reports, which can be found at http://www.shcp.gob.mx/. In addition, information of expenditures in poverty reduction programs is also accessible through the Internet at the Secretary of Social Development (http://www.sedesol.gob.mx/).

However, the 2006 law applies only to central government activities. Although the current decentralization initiative will pass increasing responsibilities to state governments, there is no federal law requiring that local authorities publicly disclose their spending. State governments must publish their annual budgets in the official gazette, which provides budget information for state agencies, but these reports are limited and lack detail.4

In a recent overview of transparency in Mexico, FUNDAR, a local research center for public participation, reported that despite concrete improvements due to increases in political plurality and division of power, Mexico still faces two major challenges: "a. Discretionary use of surplus income on the part of the Treasury Ministry; and b. the lack of transparency and accountability mechanisms that would make it possible to monitor the use of surplus income transferred to the states."5 Despite the country's genuine advances, the need remains for clarifications regarding the public right to information, accountability rules and checks and balances to the Treasury's discretionary power, the power of legislative commissions, and the obstacle of opaque areas such as government trust funds.6

Freedom of Information

Mexico's legal structure generally promotes access to information held by public agencies. Since 1977 the Mexican Constitution has included a freedom of information provision. Article 6 says that: "the right of information shall be guaranteed by the state."7

Statutory law has further entrenched the public's right to information. In June 2003 the Federal Law of Transparency and Access to Public Government Information went into effect. This transparency law establishes that all information held by government agencies is public, and requires public officials and agencies to apply the "principle of maximum disclosure when managing official information. The law requires every government entity to post basic information about its structure, personnel, budget, and operating procedures online. It allows all individuals to demand information in writing from federal government departments and establishes mechanisms for the executive to respond to information requests. The law also created the Federal Institute for Access to Official Information to promote and regulate access to official information within the executive branch.8

Under the law, information may be considered "privileged" if its release could endanger national security; undermine international relations; damage the financial, economic or monetary health stability of the country; risk the health, life, or safety of any person in the country; or seriously damage law enforcement or crime prevention. Information is "confidential" if the person who provided it to a government entity indicated that it should remain so or if it constitutes "personal data."9

There is evidence that information obtained through this law has been useful in unveiling corruption related to the misappropriation of public funds. In one example, FUNDAR, was able to document the misallocation of 200 million pesos ($19 million) in the federal budget earmarked to combat HIV/AIDS. After submitting more than 200 information requests to various federal agencies, the NGO learned that the Department of Health had distributed the funds to hospitals that did not have experience treating HIV/AIDS patients.10

Although this particular law only applies to the federal government, all of Mexico's state governments have passed similar laws in the past few years. However, a representative from FUNDAR reports that these state laws are not consistently implemented or enforced.

National Oil Fund

In 2000, Mexico established an Oil Revenue Stabilization Fund, in response to concerns about oil price volatility that led to unplanned budget cuts in the late 1990s. According to the Ministry of Finance, the Fund's objective is to "lessen the effects on public finances and the national economy from changes in the level of public revenue derived from abrupt variations in international oil prices, as well as other factors that diminish the federal government's sources of financing."11 But despite this statement, in practice the fund has lost its relevance for a variety of reasons.

First, only a relatively small percentage of oil revenues actually go into the fund. Initially, Congress established that 40% of income in excess of a reference price (defined as revenue generated by prices of oil over a Congress-set reference price) would go to the fund. The fund only received 33% of excess oil revenues in 2001; and since 2003, Congress reduced the required figure to 25%. At the end of 2007, the Fund's assets accounted for 52,244 million pesos (around $5 billion USD) or 2% of the budget for 2008.

Second, Congress decided to appropriate the Stabilization Fund and included it in its 2002 budget, a decision that disregarded the rules that existed at the time regarding proper spending of fund resources.

Third, the Stabilization Fund was managed until recently by the Ministry of Finance, which changed its rules for expenditures every year.

Finally, both Congress and government have lacked a long-term objective for this fund. The continuing increase of oil prices has also distracted attention from the need of defining a policy to also use the Stabilization Fund for savings purposes.


  1. FUNDAR, Mexico's Right-to-Know Reforms. Civil Society Perspectives. (www.fundar.org.mx)
  2. World Bank, "Mexico at a glance," 9/28/07
  3. Open Budget Index, Mexico Country Summary, 2006
  4. Rocio Moreno, "The Lack of Transparency and Accountability Mechanisms for Mexico's Oil Income." FUNDAR, Mexico's Right-to-Know Reforms. Civil Society Perspectives
  5. ibid, p. 186.
  6. Jorge Romero, "One Step Forward , Two Steps Back? Budget Transparency and Access to Information in Mexico." FUNDAR, Mexico's Right-to-Know Reforms. Civil Society Perspective, p. 169.
  7. David Banisar, Global Survey: Freedom of Information and Access to Government Records Around the World (www.freedominfo.org)
  8. Human Rights Watch, Lost in Transition: Bold Ambitions, Limited Results for Human Rights Under Fox, 2006, pp. 39-40.
  9. Human Rights Watch, Lost in Transition: Bold Ambitions, Limited Results for Human Rights Under Fox, 2006, pp. 39-40.
  10. Human Rights Watch, Lost in Transition: Bold Ambitions, Limited Results for Human Rights Under Fox, 2006, p. 44.
  11. Juan Carlos Quiroz, "Natural Resources and Fiscal Revenue in Mexico: Budget-Related Challenges in the Energy Sector," unpublished paper prepared for FUNDAR, September 2003.