Mexico's National Fiscal Coordination System history

The National Fiscal Coordination System in Mexico originated from several key legislative and administrative developments. A foundational step was the creation of the Fiscal Coordination Law in 1980, alongside the introduction of the Value Added Tax (VAT), the Municipal Development Fund, and the Complementary Financial Fund.

Key reforms included delegating greater powers to federal entities through administrative coordination in federal fiscal matters and implementing advance payment mechanisms for participation payments to improve state liquidity. In the late 1980s, a formula for the distribution of participations was designed through coordination between fiscal officials and the Ministry of Finance (SHCP).

Despite differing perspectives between northern and southern states, an equitable formula was established. Further developments included the transition of the General Fund, approved by the Congress of the Union in December 1990, and efforts to strengthen local revenue collection by incorporating dynamics from property and water taxes into fund distributions.