Public Financial Management of theMexican Federal administration relies on open and orderlyFinancial Management (FM) systems based on a strong legalframework, policies, and procedures for execution of publicexpenditures. These FM country systems are partiallyreplicated in the State of Oaxaca and, in particular, in theSecretariat of Finance (Secretaria de Finanzas, SEFIN),which will be coordinating the overall implementation of theProgram, and in the executing entities, the State WaterCommission (Comision Estatal de Agua, CEA) and the OaxacaMetropolitan Area Water Utility (SAPAO), which will beresponsible for carrying out technical activities under theProgram. Although SEFIN has limited experience in managingBank-financed operations, and CEA and SAPAO have no suchexperience, the overall conclusion of the FM assessment isthat SEFIN, CEA and SAPAO1 have suitable financialmanagement arrangements, which include the key elements foran adequate implementation of the Program, such as: (i) aformal process of budget planning and execution based oncomprehensive legal and normative frameworks; (ii) theapproval of the State Expenditures Budget on an annual basisby the State Legislature; (iii) an integrated budgeting andaccounting system (SINPRES), which allows for the managementand control of financial resources; (iv) organizationalstructures with adequate segregation of duties, documentedin the appropriate Functions and Organizational Manuals, and(v) experienced staff.