Lei de Responsabilidade Fiscal e Finanças Públicas Municipais: impactos sobre despesas com pessoal e endividamento

Dea Fioravante, Maurício Pinheiro, Roberta Vieira and José Carlos dos Santos

No 1223, Discussion Papers from Instituto de Pesquisa Econômica Aplicada - IPEA

Abstract: This study aims assessing the impact of the introduction of the "Lei de Responsabilidade Fiscal" (Fiscal Responsibility Law) on the municipal public finance. The Law established limits of indebtedness and expenses by the relations "expenses with public servants payroll over the net current revenue" and "net consolidated debt over the net current revenue" which must not surpass the 0,6 and 1,2 limits respectively. For this analysis, we build two scenarios ("before" and "after" the Law), on the basis of which we compared the municipalities` performance concerning their expenditures and debt policies. In a first analysis, we observed that the limits imposed to the municipalities were very higher than their average results suggesting "miscalibration" in the setting of those limits since the aim was to prevent the public servants payroll expenses raise without criterion. The results show that in the case of the public servant payroll ratio over the net current revenues, the imposition of a 60% limit worked as an incentive to increase that item of expenditure to most municipalities, which had results much lower than the established ceiling. Nevertheless, the minority that surpassed the ceiling had their expenses adjusted. As for the indebtedness index, the Law brought about a controlling effect to a small number of municipalities that overreached the limit imposed. However, we observed that the municipalities that were unable to fit themselves to the limit increased their participation in the aggregate debt of all the municipalities. Therefore, two effects were detected: a debt control of some municipalities and a concentration of indebtedness in others where the debt was not controlled.

Pages: 31 pages
Date: 2006-10
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Citations: View citations in EconPapers (3)

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