Over the past decade, Mexico has made significant improvements in its fiscal performance by implementing important reforms to establish macroeconomic and financial stability, to open the economy to trade and investment, and to change the political environment. The prudent fiscal policies pursued by the Mexican government have resulted in strong fiscal performance. Albeit aided by higher oil prices, these policies have successfully lowered public sector debt and reduced the budget deficit to 3% of GDP or below for the past five years (2003-08).1 Economic growth has improved over the past decade, although the economy is not expanding rapidly enough to make living standards equivalent to richer OECD countries.