In the framework of negotiations for the 2014 Federal Expenditure Budget (PPEF), the head of the Mexican Institute of Social Security (IMSS), José Antonio González Anaya, managed to gain a 13% increase in the amount that is to be allocated next year for the public institution, equivalent to 477 billion pesos. Without intending to underestimate the importance of such a raise – a number similar to the budget allocated to Mexico’s Foreign Relations Secretariat – it is essential to thoroughly analyze the future needs of the institution, given that its design will hardly be able to support the population growth estimated to be of 120 million inhabitants for the next 15 years as well as the increase of Mexicans’ life expectancy, which is to be around 75 years. In addition to all this, it needs to be said that the institution – after the approval of the Fiscal Miscellaneous Resolution – will bring additional support to their current services such as the administration of unemployment benefits and a universal pension scheme. It should be asked then: Is there any alternative to achieve a sustainable and competitive social security model?
The current Mexican public health system consists of a major apparatus whose long-term sustainability is practically impossible. It is well known the large number of structural faults faced by the public health system in the country, created in 1943. Its most worrying problem is the administration of its projected expenditure due that no government has tried to turn it into a more efficient system. Firstly, there are few control variables that will allow it to make a long-term strategy, due to the fact that urgent solutions for its most urgent needs – such as paying pensions or debts – generally distracts it from attending essential tasks such as complying with its main motto: providing quality health systems. Nowadays, IMSS working liabilities amount to 1.9 billion pesos. Additionally, its budgetary restrictions are subject to changes in the conformation of the population pyramid as well as the availability of fiscal resources that the government manages to acquire in recession times. As a consequence, given the systemic nature of the institution’s dysfunction, any budget increase will unavoidably be disseminated in the short-term.
It is surprising that little to nothing has been done in order to address the structural problem. There are examples that show efficient and creative ways to administer assets, such as oil reserves, to be capitalized and transferred in order to benefit a sustainable social welfare system. The Norway example is a typical case: since 1975 oil revenues are safeguarded by an institutional framework that allows that the exceeding resources of oil exploitation to be programmed into investing into the education system, building infrastructure and pension schemes.
In the face of a future energy reform, it is worth reflecting upon the convenience of issuing a Mexican piece of legislation enacting a Sovereign Fund that will allow oil revenues to be administered in the long term. Without the aim of idealizing that public policy and, taking into account the large differences existing in conditions between a country such as Norway and Mexico, it is worth reflecting upon if this sort of mechanism may be used as an alternative of national strategy planning to support the solution to a growing problem of social security in Mexico. An opportune, intelligent, transparent and accountable design will be able to provide a relief. Will Mexico take advantage of this moment or once again will it let it go away?
CIDAC
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