Econometric Analysis of Budgetary Executions of the Decentralized Territorial Collectivities

Tsikomia Amaï de Arsan Miriarison
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Tsikomia Amaï de Arsan Miriarison: University of Toliara, Madagascar

Risk in Contemporary Economy, 2021, 170-202

Abstract: The focus on the budget management of local authorities does not seem successful in terms of forecasting and execution, since it only requires an analytical comparison of the administrative accounts of an ex-ante achievement in order to predict ex-post. The externality of political and economic instability and of the local government model (in terms of the choice of fiscal policy, investment and control system) chosen by the elected representative, must be taken into account in the 'development of an analysis and forecasting model, also taking into account economic variables or parameters (crisis, growth, inflation and fiscal pressure). Therefore, it is preferable that the analysis of the local finance budget is established by a reliable method, using an adapted and parameterized prediction model, knowing that all economic and political variables will be considered. The econometric analyzes were made on observations of the administrative accounts from 2002 to 2019 of the economic capital of Madagascar (Urban Commune of Toamasina - I) resulting in eleven econometric models: equilibrium or global model (income and expenditure), model of decentralization effect (local tax revenues and budget shocks), room model for implementation of operating expenses, model of budget execution performance, model of budget structure, model by nature of the budget (revenue from operation, investment income, operating expenditure, investment expenditure). The absence of data on the consolidation of local authorities in Madagascar has not made it possible to establish the macroeconomic dimension of the local authorities’ budget. Given the quality of the tests carried out, the results are not free of bias. Bias can have several sources. As much, they can be linked to the fact that we measure the budgetary performance of the Communes from the administrative account, of which the political choices of the authorizing officer or the local elected representative are, the size of the commune (in terms of the number of population and sector of existing activity) are different and that the redistribution system (grants and allocations) are unfair. They can also come from the political orientation position of the central state, on public investment, favoring an imbalance in the dynamics of local development. So, although improbable, a modification of State-local authority relations would undoubtedly not be without effect on the behavior of budget forecasting.

Date: 2021
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