Over the past decade, Mexico has undergone significant economic and political reform. This period has witnessed important improvements in the health of public finances. The government’s narrow measure of the budget deficit has been below 1% of GDP for the past five years (2003-08). Furthermore, the public sector borrowing requirement – the broader definition of budget deficit1 – has been below 3% of GDP for the same period. Although these improved fiscal balances have been aided by higher revenues as a result of significant increases in oil prices, Mexico’s recent public finances have clearly reflected an era of fiscal responsibility. This improved fiscal situation should place Mexico in a better position to withstand the current global economic crisis.