Mexico’s Budgeting for Sustainable Development

Read this post in: Spanish | French | Bahasa | Arabic

The Challenge

Since their adoption at the United Nations’ General Assembly in 2015, the Sustainable Development Goals (SDGs) represent both the global consensus on a baseline of work to be undertaken in order to achieve global sustainability and resilience and a challenge to find organic ways for this agenda to not just coexist with but also to strengthen national policymaking.

In Mexico, we at the Ministry of Finance were faced with this challenge but our deep commitment to the goals and their long-term perspective encouraged us to finds ways to tackle it. We understood the need to begin with a thorough diagnosis of what was already being done, particularly in terms of how much the government was investing in actions related to the SDGs. We needed a clear picture of how our current investments and development plans aligned with the SDGs in order to inform decisions that are strongly embedded in an SDG perspective, and to ensure that this perspective is the back bone of the budgetary process.

What We Did to Align Mexico’s Budget With the SDGs

Mexico’s Sustainable Development Goals Specialized Technical Committee, led by the Office of the Presidency and the National Institute of Statistics and Geography developed a framework aimed at integrating planning, public finance management, policymaking, and oversight so as to achieve the SDGs. Within this framework, the Mexican Ministry of Finance and Public Credit partnered with the United Nations Development Programme to identify the specific budget items that would contribute to progress on the SDGs, using a Results-based Management perspective.

In practice, the link between budgets and SDGs is not direct, but needs to be mediated by local systems and institutions; therefore Mexico used the following basic elements of its institutional architecture to strengthen the connection:

1. National Planning: in Mexico the National Development Plan is the source of development priorities and plans out of which decisions on budgetary allocations flow.
2. Budgetary Programmatic Structure: the Ministry of Finance groups budget allocations according to the objectives of these allocations, rather than, say, by spending units. According to the World Bank, a budgetary program is a spending category based in groups of goods (or supporting services) with a common objective, often a result.
3. Performance Evaluation System: guided by a Results-based Management approach, the Ministry of Finance monitors program performance using indicators structured in a logical framework matrix that identifies target outputs or outcomes, as well as by collecting information from independent evaluations.
4.  Accounting Harmonization: each budget allocation within a program is classified according to who will spend the funds, what the funds will be spent on (e.g., salaries, equipment, etc.), what for (e.g., education, health, etc.), and where they will be spent. The system of classifications allows us to have integrated information across programs, sectors, and levels of government (federal, state, and municipal).

This institutional architecture allows us to stream down from the SDGs to specific investments as illustrated in the following graphic:

Building on this structure, we devised two main steps (still in progress) to develop a budget that contributes to the SDGs:

1. Linking: A process through which each ministry used the Performance Evaluation System and National Planning to match their programs to the SDGs.
2. Quantifying: Identifying the programs that contribute to each SDG target and indicating whether it is a direct or indirect contribution, in order to estimate our total investment per target and overall. Moreover, 102 SDG targets were further disaggregated by different topics, allowing us to identify more precisely the part of the target that a specific government action is to address.

Preliminary Results

• We now know both the percentage of SDGs that are linked to government programs and the number of programs that are linked to each SDG. For example, as you can see in the following graph, for 16 out of the 17 SDGs, we were able to draw a linkage of over 85% of the goals to our budgetary programs. For 10 SDGs, we have full (100%) coverage of the goals linked to a budgetary program:

Click to enlarge. Preliminary results may vary due to adjustments made by governmental offices at the quantification stage.

• We will be able to show what has been done and communicate our country’s starting point, empowering all the sectors, including private and social sectors, to participate effectively.
• We will be able to take SDG informed budgetary decisions.

It is with this vision that Mexico aims to strengthen the alignment of national policy with key features of the 2030 Agenda for Sustainable Development: a long-term, integral, transformational approach to building a better future.

See more details and our preliminary results per SDG in our booklet.

Further Reading

• Investing for Sustainable Development: How Does Mexico Invest in the Sustainable Development Goals? (Transparencia Presupuesteria, Mexican Ministry of Finance)
• Tracking Spending on the Sustainable Development Goals: What Have We Learned from the Millennium Development Goals? (IBP publication, May 2017)