Mexico: Fiscal descentralization in times of change and austerity
Abstract
As this time, the Government of Mexico follows a logic of fiscal rationality and austerity, with the objective of exercising the budget efficiently and effectively, however, this approach can be detrimental to subnational governments, because the contraction of public spending can cause several risk to some federal, state or municipal programs, that may be eliminated, which would result in an increase in the inequality gap, caused by the decrease in support from the Federal Government, as well as the weak fiscal structure and the little financial self-sufficiency that local governments have.
Therefore, this article seeks to answer the following questions: Expand centralization or decentralize your spending? Should you begin to decentralize income? What are the necessary changes so that an advance on decentralization can produce the expected results? Is austerity at the central level the best scenario to establish a better relationship of fiscal coordination?
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