Mexico - State-Level Public Expenditure Review : The Case of Guanajuato
2002
World Bank
This Public Expenditure Review (PER) examines the situation in the State of Guanajuato, Mexico, where striking contrasts prevail in both its private, and public sectors. While its private sector has attracted both domestic, and foreign enterprises, from an economic and social point of view, current private sector growth is not as labor intensive as the declining sectors, and international investments have not yet generated full, complementary support to small firms, which are typically more labor intensive. Moreover, poorer regions away from the industrial corridor, lack relevant education, and transport connections, to allow the population access to steady employment. The State however, has not yet planned for an economic growth strategy, with the corresponding public policies. Interestingly, the State's public sector has exceptionally competent management, with no deficits, excellent credit ratings, and creative use of private sector participation in delivering public goods. However, education coverage at the secondary, and tertiary levels is one of the lowest in the country. Thus, the strategy for public spending over the next five years, will expand educational coverage at the secondary level, make adult education available, improve transport connections and access to housing for the poor in the urban-industrial corridor. Furthermore, the State will need to increase current resources, through a reform of the National System of Fiscal Coordination, and/or introduce a payroll tax, explicitly to pay for new programs. Both options give the State more control over its revenue. Health care coverage should be ascertained, and, a plan to upgrade, and build health facilities should be developed. Guanajuato should expand infrastructure, through good regulatory framework for private-sector operators, and, a program of mortgage (or leasing) financing of buses should improve public transportation.
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