MX Fiscal Transparency The overall purpose of the grant would be to strengthen fiscal transparency -and, as such, governance and accountability- through the development of tools to harmonize budgetary and financial information. The federal-state commissions (CPFF in particular) have already broken significant ground but challenges remain. Tackling these challenges, combined with the country's state credit rating system,  could place Mexico at the forefront of subnational fiscal transparency.  The federal Secretariat of Finance and Public Credit (SHCP), through its departments of Coordination of Federal Entities (UCEF) and Government Accounting (UCGIP), has an important convening role in the accounting harmonization process.  On a technical level, however, while in some cases it may be best for states to follow federal government practices, in many areas the federal government should also consider following the lead of particular states. A complementary approach combining "top down" general rules with "bottom up" specifics and systems, all anchored in a federal-state partnership, is likely to yield better results through ownership and knowledge sharing. Through its careful work over the last two years, the Bank has earned a place as a trusted facilitator of such partnerships, which has lead to the government's request for this IDF grant. Recognizing the potential economies of scale inherent to development of adaptable common tools to address similar problems, the support strategy is to contribute to the "bottom up" processes mentioned above, particularly through the direct support to a program designed by the State of Aguascalientes, a credible and leading voice among states on budgetary and accounting harmonization.  The tools developed with IDF support would be shared with other states and the federal government, with the aim at documenting lessons learned and facilitating replication. This approached has been endorsed by the SHCP. The grant would have two specific objectives: (i) to build capacity in the State of Aguascalientes to develop harmonized budgetary and accounting systems capable of producing timely and reliable fiscal information in accordance with suitable standards; and (ii) to continue supporting state-federal partnerships for discussion and knowledge sharing, in the context of the national fiscal coordination system (SNCF). The grant proposal is largely based on the Budgetary and Accounting Harmonization Program of the State of Aguascalientes, and takes into consideration discussions with the relevant departments from the federal Secretariat of Finance (UCEF and UCGIP). Such initiative attests to strong country ownership and commitment. Moreover, as noted earlier, the incoming federal administration intends to pay attention to fiscal transparency and accountability at the three levels of government. In fact, a meeting was held at the request of the transition team to discuss specifically aspects of fiscal transparency, particularly on budgetary and accounting harmonization. (i) to build capacity in the State of Aguascalientes to develop harmonized accounting systems capable of producing timely and reliable fiscal information in accordance with suitable standards; and (ii) to support federal-state partnerships for discussion and knowledge sharing, in the context of the national fiscal coordination system (SNCF)