Editoração IFGF Inglês

Transcription

2016
2015
July/2016
IFGF 2016 - FIRJAN FISCAL MANAGEMENT INDEX - BASED ON 2015
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Sistema FIRJAN
Federation of Industries of the State of Rio de Janeiro
PRESIDENT Eduardo Eugenio Gouvêa Vieira
2016
EXECUTIVE VICE PRESIDENT (ACTING)/ RELATIONS WITH ASSOCIATES
EXECUTIVE DIRECTOR Ricardo Carvalho Maia
SESI-RJ SUPERINTENDENT/ SENAI-RJ REGIONAL DIRECTOR/
EXECUTIVE DIRECTOR OF OPERATIONS Alexandre dos Reis
.............................................................................................................................
Economic Development Board
DIRECTOR Luciana Costa M. de Sá
ECONOMIC STUDIES MANAGER Guilherme Mercês
2015
Technical Staff
Anna Carolina Gaspar
Carolina Lopes Neder
Ihorana Cuco
Jonathas Goulart
Julia Pestana
Marcio Afonso
Nayara Freire
Raphael Fernandes
Raphael Veríssimo
William Figueiredo
GRAPHIC DESIGN
GENERAL MANAGER OF COMMUNICATION Daniela Araújo Lins Teixeira
MARKETING COMMUNICATION MANAGER Ingrid Buckmann
Cardoso de Mello
Technical Staff
Paulo Quintão
Vanessa Raposeiro
Translation
Plan Idiomas
.............................................................................................................................
www.firjan.com.br/IFGF
Av. Graça Aranha, 1, 10º andar - Centro, Rio de Janeiro
economia@firjan.org.br
d
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SUMMARY
Executive Summary
6
The FIRJAN Fiscal Management Index (IFGF)
9
Data Base
11
General Overview
11
IFGF Own Revenue
13
IFGF Staff Costs
14
IFGF Investments
15
IFGF Debt Costs
16
IFGF Liquidity
17
Highest and Lowest
19
Capitals
21
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EXECUTIVE SUMMARY
The Brazilian fiscal problem is not unique to the federal government, very much to the contrary. States and
municipalities are on the verge of insolvency, with the aggravating factor that hundreds of them are already
failing to comply with the limits imposed by the Fiscal Responsibility Law (LRF). In other words, in addition
to the fiscal risks, there are also political and institutional risks. In this context, the FIRJAN Fiscal
Management Index (Índice Firjan de Gestão Fiscal – IFGF in Portuguese) presents a complete and
unprecedented picture of the fiscal situation of the thousands of municipalities based on 2015 data.
The index is composed of five indicators: Own Revenues, Staff Costs, Investments, Liquidity and Debt
Costs. It is quite simple to read the results: scores range between 0 and 1, the closer to 1, the better the
municipality fiscal situation in the studied year. Another important IFGF feature is that the methodology
allows both relative and absolute comparisons, i.e., the index is not restricted to an annual image and
comparisons can be made over the years.
The IFGF exclusively uses official statistics declared by the municipalities to the National Treasury
Department (STN), in accordance with the Fiscal Responsibility Law (LRF). Regarding the legal
determination, until July 12, 2016, the data of 880 municipalities were not available or had inconsistencies
that prevented the analysis. This number represents 15.8% of the 5,568 Brazilian municipalities and is the
highest since the start of the IFGF analysis in 2006. Thus, the IFGF 2015 assessed the fiscal situation of
4,688 municipalities with 180,124,602 inhabitants - 89.4% of the population.
There follows the main results of IFGF:
• In 2015, the situation of municipal public accounts deteriorated significantly, being the worst in more
1
than ten years. Indeed, the IFGF Brazil reached its lowest level since 2006, with 87.4% (4,097) of the
4,688 analyzed municipalities in a difficult or critical fiscal situation (grades C and D in the IFGF). Only
12.1% of Brazilian cities (568) showed a good fiscal situation (grade B), and only 23 (0.5%) had an
excellent fiscal management (grade A). Summarizing, 2015 had the highest percentage of municipalities
in a critical fiscal situation and the lowest number in a good and excellent grade.
• The 2015 data showed that the sharp drop in revenues, especially those from state and federal transfers,
were not accompanied by a reduction in staff costs. Thus, the municipal civil service costs began to
consume an even larger share of budgets, at the sacrifice of a strong reduction in investments.
Furthermore, local governments resorted to, more than ever, the entry of outstanding liabilities as a
variable of account adjustments.
• Analysis of the IFGF indicators perfectly illustrates this diagnosis. The IFGF Own Revenue follows as the
indicator with the lowest score (0.2531 points), confirming the high dependence of municipalities on
state and federal transfers. At the same time, The IFGF Staff Costs reached its worst result (0.4743
points, down from 0.6663 in 2007), which means that municipalities have never had their budgets so
committed to the payment of civil service expenses. This scenario was reflected in both the IFGF
Investments (0.4278) and the IFGF Liquidity (0.4429). After reaching high levels in 2011, in 2015 they fell
to the lowest level in nine years, confirming the cut in investments and the use of outstanding liabilities
as the major fiscal adjustment tools of the municipalities. Finally, the result of the IFGF Debt Costs
(0.8358) showed that indebtedness to the Union is not a problem for the vast majority of municipalities,
unlike that observed for the states.
• The IFGF Own Revenue continued to be the lowest among the five analyzed indicators, with 0.2531
points. The vast majority of Brazilian municipalities (92.5%) was evaluated with grades C or D in IFGF
Own Revenue. This means that 4,335 analyzed municipalities were not able to generate even 30% of
their revenues; only 216 (4.6%) generated more than 30% (grade B in IFGF Own Revenue), and only 137
1
The IFGF Brazil is the simple consolidated IFGF arithmetic average of the 4,688 analyzed municipalities in this indicator edition.
PAGE 6
(2.9%) more than 40% (grade A). Despite the decline in total revenues, the small indicator growth
compared to the previous year reflects the steeper decline in revenue transfers, which resulted in the
higher share of own revenues in the municipal budgets.
• The IFGF Staff Costs revealed that ever more municipalities exceeded the 60% ceiling of the current net
revenue (RCL in Portuguese) established by the civil service law: in 2015 there were 740 (15.8%). By
comparison, in 2007 only 115 municipalities were in this situation. Between 2007 and 2015, the
proportion of current net revenue (RCL) spent on these expenses increased from 46.3% to 54.1%. That is
to say, spending on civil service costs grew more than revenue and swallowed almost 10 more
municipal budget percentage points in just eight years. Thus, the IFGF Staff Costs reached its lowest
level since start of the IFGF analysis to score 0.4743 points. In fact, year after year more cities enter the
danger zone. The 2,684 municipalities (57.3%) with grade C in the indicator consume between 50% and
60% of the current net revenue (RCL) with staff costs. Maintaining the rate over the last decade, in the
next five years more than a thousand municipalities will have exceeded the limit established by the Fiscal
Responsibility Law (LRF).
• The investment cuts were intense and widespread: 3,043 (64.9%) cities invested less than in 2014.
Therefore, the average percentage invested by Brazilian municipalities was only 9.0% of the current net
revenue (RCL), well below the historical average of 11.7% and the peak achieved in 2012 (14.2%). The
IFGF Investments showed that more than half (2,549, 54.4%) of the Brazilian municipalities did not even
invest 8% of their current net revenue and therefore earned grade D in IFGF Investments. Only 10.9%
(513) municipalities achieved grade A by investing more than 16% of their current net revenue.
Therefore, the IFGF Investments fell to 0.4278 points, the lowest since 2006. In all, municipalities
reduced investments by R $ 11.4 billion.
• The IFGF Liquidity showed that municipalities have increasingly used the postponement of expenses via
outstanding liabilities as a form of financing. On average, municipalities entered 2015 with 57.9% of
committed cash expenses from the previous fiscal year, almost twice that observed in 2007 (30.4%). As
a result, the IFGF Liquidity reached 0.4429 points, the lowest since 2006. The proportion of cities with
grade D was 30.9% in 2015, which meant that 1,450 cities ended 2015 with no resources to cover the
2
outstanding liabilities the following year, receiving a zero score in IFGF Liquidity - among them six are
capitals: Belém, Belo Horizonte, Campo Grande, Florianópolis, Goiânia and Teresina. Moreover, 38.0%
of municipalities (1,783) received grade C. Consequently, the well assessed percentage of municipalities
by this indicator receded, only 31.0% of the cities received grades A or B, the lowest percentage since
2007.
• Brazilian municipalities continued to be well assessed in IFGF Debt Costs that, despite having a slight
decrease compared to 2014, remained as the best of monitored indicators (0.8358 points). In fact, the
difficulty with interest payments and amortization is concentrated in very few municipalities, particularly
the larger ones. As an evidence of this, as many as 3,779 municipalities have declared no Consolidated
Net Debt. Thus, 68.6% of Brazilian municipalities (3,214) received grade A and 1,173 (25.0%) grade B in
this indicator. At odds with these results, 250 (5.3%) cities were evaluated with grade C and 51 (1.1%) with
grade D - in this group attention is drawn by the capitals São Paulo (SP), Belo Horizonte (MG) and
Maceio (AL).
• The comparative analysis of the country's highest and lowest IFGFs shows there is a real gap between
the 500 municipalities in a better fiscal situation and the 500 worse off. The IFGF Liquidity was the
aspect that most contributed to separate the wheat from the chaff in terms of fiscal management. While
425 of the 500 lowest placed received a zero score in IFGF Liquidity, among the top 500 there were
only six cities evaluated in this situation.
2
To calculate this index, it was agreed that if the municipality submitted more outstanding liabilities than available resources their
score would be zero. This condition is only mandatory in government transitional years (art. 42 of the Fiscal Responsibility Law);
otherwise to initiate a year with more supplier debt than resources is a problem that affects the financial management and the
municipality credibility. While reading the results, the closer to 1.00, the less the municipality is delaying payments to the following
year without adequate coverage.
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• The way municipalities allocated their resources between current expenditure and investments was also
a determining factor to be situated at the top or bottom of the fiscal management ranking. Among the
500 best evaluated cities, the average percentage spent on the civil service payroll was 48% of the
Current Net Revenue (RCL), in contrast to the 65% observed in the lowest placed 500.
• Of course, the increasingly tighter budgets due to the higher payroll commitment limited investments in
improvements for citizens. Evidence of this is that the 500 best placed municipalities invested on
average 15% of their revenues, whereas the cities at the opposite end invested only a quarter of that
(4%). So, while 312 municipalities of the first group received grades A or B in IFGF Investments, in the
second, only seven evaluated cities exceeded 0.6 points.
• In the capitals, the public finance situation was also the worst in 10 years, with IFGF Staff Costs, IFGF
Liquidity and IFGF Investments reaching the lowest values since the series started in 2006. The diagnosis
of capitals is similar to other municipalities. The drop in current net revenues met with the very tight
budgets caused by higher staff costs. Thus, the capitals increased the commitment of the current net
revenue with the payroll. In 2015 this figure reached 51.3% on average. In 2007, it was much lower:
47.1%.
• Even so, capitals' fiscal situations were better than the other municipalities. While IFGF Brazil fell by 7.5%
compared to 2014, capitals' average IFGF fell 4.5%; about the level, it was 37.3% above the national:
0.6083 against 0.4432 points. As such, 2015 was the year with the highest number of capitals in the
Country's top 100 results, six achieved this ranking. Nevertheless, no capital showed excellence in fiscal
management (grade A in the IFGF), and twelve recorded tough fiscal management (grade C in the IFGF),
the highest number of the analysis.
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THE FIRJAN FISCAL MANAGEMENT INDEX (IFGF)
Launched in 2012, the IFGF sheds light on a very important issue for the country: the way in which taxes
paid by society are administered by the municipalities. Since then, the IFGF has brought greater
transparency to municipal accounts to facilitate understanding of the data and information provided by the
municipalities. Through a simple tool and available for public consultation, all Brazilian citizens can now
enter the discussion about the fiscal status of their city.
The IFGF seeks to portray the municipal management challenges in the allocation of resources, in view of
the budgetary constraints with which the Brazilian municipalities are faced. On the revenue side, the
problem is their dependence on intergovernmental transfers. On the spending side, the challenge is the
management of current expenditure (mainly staff costs and debt servicing charges), because the tight
budgets are due to their considerable weight on the budget, which could jeopardize the resources planned
for other purposes, particularly investments. Finally, it was found that many local governments postpone
expenses via the registration of outstanding liabilities without cash coverage as an alternative form of
borrowing, thus generating a liquidity problem.
Based on this analysis, the five indicators that make up the IFGF were built. They are: Own Revenue, Staff
Costs, Investments, Liquidity and Debt Costs. The first four have a 22.5 wt% of the aggregated result. The
Debt Costs, in turn, has a 10 wt%, given the low level of Brazilian municipality indebtedness. This fact
reflects the inability of most municipalities to contract debt, whether by the numerous restrictions to which
they are subjected, or due to the lack of guarantees faced in the credit market. Finally, it is noteworthy that
all the indicators are in accordance with the parameters set by the Fiscal Responsibility Law. There follows a
description of each one:
IFGF Own Revenue: measures the total revenue generated by the municipality in relation to the total
3
Current Net Revenue (RCL) . The index facilitates assessing the degree of a municipality's dependence with
regard to state and Union transfers.
IFGF Staff Costs: represents how much municipalities spend on staff salaries, relative to the total current
net revenue (RCL). Given that this is the expenditure with the biggest share in the total municipality
expenditure, this indicator measures the degree of budget rigidity, i.e. the municipality's room to maneuver
in implementing public policies, particularly in investments.
IFGF Investments accompany the total investments compared to current net revenue. Paved streets,
quality public illumination, efficient transportation, well-equipped schools and hospitals are examples of
municipal investments able to increase worker productivity and promote the population's welfare.
IFGF Liquidity: verifies that the municipalities are leaving sufficient resources to honor the outstanding
liabilities year to date, measuring the municipality's liquidity as a proportion of current net revenues.
IFGF Debt Costs: corresponds to interest expense and amortization in relation to the total actual net
4
revenues (RLR) . The index evaluates the budget commitment to the payment of interest and repayment of
loans contracted in previous years.
3
Current Net Revenue (RCL) is the constitutional concept used to calculate the budgetary limits. It is the total municipal budget
revenues minus the civil servants contributions for the cost of their pension and social assistance system and the revenue accruing
from the financial compensation of the various social security systems.
4
Real Net Revenues (RLR) is used to determine the payment limit of debt of states and municipalities renegotiated with the National
Treasury and the calculation of the ratio Net Debt / Real Net Revenues. For the municipalities, the concept of RLR excludes from total
revenues those revenues from credit operations, sale of assets, voluntary transfers or donations received for the specific purpose of
meeting capital expenditure.
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Below: Summary table of indicators that make up the calculation of the FIRJAN Fiscal Management Index
(IFGF).
FIRJAN Fiscal Management Index
Own Revenue
Investments
Staff Costs
Liquidity
Debt Costs
Local revenues
generation
Capacity to make
investments
Degree of budget
rigidity
Cash sufficiency
Cost of long-term
debt
Own Revenue
Current Net Revenue
Investments
Current Net Revenue
Staff Costs
Current Net Revenue
Cash – Outstanding
Liabilities
Current Net Revenue
Interest and Amortizations
Real Net Revenue
22.5%
22.5%
22.5%
22.5%
10.0%
It is quite simple to read the results, by indicator or the whole index: scores range between 0 and 1, and,
the closer to 1, the better the city's fiscal management in the studied year. Seeking to establish
benchmarks to facilitate the analysis, four grades were defined for the IFGF:
•
Grade A (Excellent Management): Results higher than 0.8 points.
•
Grade B (Good Management): Results achieved between 0.6 and 0.8 points.
•
Grade C (Distraught Management): Results achieved between 0.4 and 0.6 points.
•
Grade D (Critical Management): Results below 0.4 points.
Another important feature is that the IFGF methodology enables both relative and absolute comparison, i.e.,
the index is not restricted to an annual image and can be compared over the years. Thus, it is possible to
precisely specify whether a relative ranking improvement was due to factors specific to a particular
municipality or to the worsening of the others.
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Data Base
In this edition, the FIRJAN Fiscal Management Index refers to 2015 and provides comparisons with
previous years in the series, which began in 2006. The index is entirely based on the tax returns declared by
each municipal administration, official information annually made available by the National Treasury
Department (STN) through the "Finances of Brazil" files, known as Finbra.
The Fiscal Responsibility Law, article 51 stipulates that by April 30 of the following year the municipalities
must submit their accounts to the STN, which has 60 days to make them publically available. Nevertheless,
until July 12, 2016, the data of 880 municipalities were not available or had inconsistencies that prevented
5
the analysis . This number represents 15.8% of the 5,568 Brazilian municipalities and is the largest observed
since the publication of this study. No state had data available for all its municipalities in 2015, especially
Amapá, Pará and Acre, where less than half of the municipalities declared their information. Therefore the
IFGF 2015 evaluated 4,688 municipalities, with a total of 180,124,602 inhabitants - 89.4% of the population.
Finbra 2015 is the first in which all municipalities declared their information based on the new Public Sector
Accounting Plan (PCASP). This new accounting plan, prepared by the National Treasury Department, aims
to standardize accounting practices to adapt them to prevailing legal requirements, to Brazilian public
sector accounting standards and international public sector accounting standards. Thus, this enables the
consolidation of National Public Accounts, as determined by the Fiscal Responsibility Law (FRL).
General Overview
The worst fiscal situations for the last 10 years: 87% of Brazilian municipalities are in a distraught or
critical fiscal situation.
In 2015, the situation of municipal public accounts worsened, being the worst in more than ten years.
6
Indeed, the IFGF Brazil reached its lowest level since 2006, with 87.4% (4,097) of the 4,688 analyzed
municipalities in distraught or critical fiscal situations (grades C and D in IFGF). Only 12.1% Brazilian cities
(568) showed good fiscal management (grade B), and only 23 (0.5%) had excellent fiscal management
(grade A). In summary, 2015 was the year with the highest percentage of municipalities in a critical fiscal
situation and the lowest number in a good and excellent situation. The graphs below illustrate these results.
Graph 1: Evolution of IFGF Brazil
0.5341
0.4989
2006
0.4973
2007
0.5104
0.5097
0.5079
0.4699
2008
2009
0.4545
2010
2011
2012
2013
0.4792
0.4432
2014
2015
5
The Methodological Appendix lists the 880 municipalities where it was not possible to perform this analysis for lack of official data.
According to Art.51 of the LRF, the deadline for declaration of municipal public accounts with the STN is until April 30, 2016 (the
following year). The date of July 12, 2016 was considered to end data collection for this edition of IFGF.
6
IFGF Brazil is the simple arithmetic average of the consolidated IFGF of all 4,688 municipalities analyzed in this indicator edition.
PAGE 11
Graph 2: Distribution of municipalities by IFGF grade
49.4% 49.6% 50,9%
36.5%
26.1%
23.3%
22.7%
26.2%
12.1%
1.1%
D
C
B
1.5% 0.5%
A
The problem of municipal public accounts is structural and similar to that faced by federal and state
administrations. It is related to the high commitment of budgets with mandatory spending (especially staff),
which, in times of revenue decrease, results in high deficits. The truth is that there is little scope to adjust
costs to the income capacity, leaving the public accounts extremely exposed to economic conjunctures.
In the case of municipalities, chronic dependence on transfers is an aggravating factor.
2015 data showed that the reduction in staff costs did not follow the sharp drop in revenues, especially
those revenues from state and federal transfers. Thus, the cost of civil services began to consume an even
larger share of municipal budgets, sacrificing a strong cut in investments. In addition, local governments
rely ever more on billing outstanding liabilities as an account adjustment variable instead of contracting
long-term debt.
Analysis of IFGF indicators perfectly illustrates this diagnosis. IFGF Own Revenue follows as the indicator
with the lowest score (0.2531 points), confirming the chronic dependence of municipalities to state and
federal transfers. At the same time, the IFGF Staff Costs reached its worst result (0.4743 points, down from
0.6663 in 2007), which means that municipalities have never had their budgets so committed to the cost
of the civil service. This scenario was reflected in both the IFGF Investments (0.4278) and the IFGF Liquidity
(0.4429). After reaching high levels in 2011, in 2015 these fell to the lowest level in nine years, confirming
the investment cut and the use of outstanding commitments as the major fiscal adjustment tool of the
municipalities. Finally, the result of IFGF Debt Cost (0.8358) showed that indebtedness to the Union is not a
problem for the vast majority of municipalities. The graph below shows the evolution of IFGF indicators for
7
the years 2007, 2011 and 2015 , all the 3rd year of the government mandates.
The indicator analysis is displayed in the following order: source of funds (IFGF Own Revenue), resources
destination (IFGF Staff Costs, IFGF Investments and IFGF Debt Costs) and, finally, the availability of cash to
cover short-term obligations (IFGF Liquidity).
Graph 3: Distribution of municipalities by IFGF grade
0.8021
0.7980
2007
0.8358
2011
2015
0.6663
0.6171
0.5527
0.4743
0.5071
0.5067
0.4451
0.4278
0.2359
0.2339
0.4429
0.2531
IFGF Own Revenue
IFGF Staff Costs
IFGF Investments
IFGF Debt Costs
IFGF Liquidity
7
The choice of these specific years, which refer to the third year of mandate of municipalities, aims to prevent comparisons with
previous years being affected by the seasonality of municipal political cycle.
PAGE 12
IFGF Own Revenue
This measures the total revenues generated by the municipality in relation to the
total Current Net Revenue. It aims to evaluate the degree of dependence of
municipalities with regard to intergovernmental transfers.
The dependence of resources transferred by the federal and state governments remains a chronic problem
for Brazilian municipalities. On average, only 12.7% of municipal revenues are from own resources, and the
rest comes from transfers from the state and federal governments. That is, the vast majority of
municipalities have no room to maneuver to cope with falling revenue transfers, totally at the mercy of
8
economic and political developments. In 2015, despite an average real reduction of 6.7% in municipal
revenues compared to 2014, the fall of transfers increased the share of own revenues in the municipal
budgets. At this point, it is noteworthy that the capital and agreements transfers and the Union and state
resources destined for the municipalities to implement investments jointly recorded a real decrease of
22.5% in the period.
Chronic dependency: 81% of the municipalities generate less than 20% of its revenues.
Thus, the IFGF Own Revenue grew, reflecting, albeit discreetly, the largest share of own revenues in the
municipal budgets. Nevertheless, the indicator remained the lowest among the analyzed five with 0.2531
points. The vast majority of Brazilian municipalities (92.5%) was evaluated with grades C or D in IFGF Own
Revenue. This means that 4,335 analyzed municipalities were unable to generate even 30% of their
revenues; only 216 (4.6%) have generated more than 30% (grade B in IFGF Own Revenue) and only 137
(2.9%) more than 40% (grade A). The graphs below show the historical performance of IFGF Own Revenue.
Graph 4: Evolution of IFGF Own Revenue
0.2359
0.2242
2006
2007
0.2248
0.2276
2008
2009
0.2377
0.2339
0.2411
0.2393
0.2385
2010
2011
2012
2013
2014
0.2531
2015
Graph 5: Distribution of municipalities by grade of IFGF Own Revenue
83.3% 84.2% 81.4%
10.4%
D
8
9.8% 11.1%
3.9% 3.9% 4.6%
2.4% 2.2% 2.9%
B
A
C
In real terms (IPCA / IBGE), own revenues remained practically stable, while revenue transfers fell 7.1% compared to 2014.
PAGE 13
IFGF Staff Costs
This represents how much municipalities spent on staff expenses in relation to the
total Current Net Revenue. The index measures the room for municipalities to
maneuver in the implementation of public policies, particularly in investments.
Spending on staff is the main budget element for Brazilian municipalities. Due to its rigid character, the
excessive commitment of municipal revenues with this expense should be avoided, as it implies the
9
reduction of resources allocated for other purposes, affecting public policies . Therefore, the Fiscal
Responsibility Law establishes a prudent limit and a ceiling in these expenses: 57% and 60%, respectively.
However, against this recommendation, spending on civil servants has committed an ever increasing share
of municipal budgets. Between 2007 and 2015, the proportion of the Current Net Revenue (RCL)
consumed by these costs in Brazilian municipalities increased from 45.0% to 54.1% i.e., spending on the
civil service grew more than revenue and swallowed almost 10 more percentage points of municipal
budgets in just eight years. Thus, the IFGF Staff Costs reached its lowest level since the start of the series to
score 0.4743 points. In 2015 staff expenditures have lagged behind the falling revenue.
740 municipalities exceeded the 60% limit of the RCL in staff costs imposed by the LRF.
In this disturbing dynamics, increasingly municipalities surpass the 60% current net revenue ceiling
established by law for the civil service costs: in 2015 there were 740 (15.8%). Because they have values
above the legal limit, the cities received a score of zero and grade D in IFGF Staff Costs. For comparison, in
2007 only 115 municipalities were beyond the law by exceeding the spending limit for personnel. In fact,
year after year more cities enter the danger zone. The number of municipalities with grade C on the
indicator, which consume between 50% and 60% of their RCL with staff costs reached 2,684 (57.3%).
Consequently, the percentage of municipalities with grades A or B in IFGF Staff Costs reached 27.0%, the
lowest percentage in the series. The graphs below show the historical performance of IFGF Staff Costs, in
which the worsening trend is evident.
This dynamics is really disturbing. Holding the pattern of the last decade, in the next five years average
municipal spending on staff will reach the ceiling of the LRF (60% of RCL), meaning almost a thousand
municipalities would be disobeying the Fiscal Responsibility Law.
Graph 6: Evolution of IFGF Staff Costs
0.6783
0.6663
0.6946
0.6171
0.5705
0.5740
0.5556
0.4924
2006
2007
2008
2009
2010
2011
2012
2013
9
0.5200
0.4743
2014
2015
Seeking to avoid budgetary rigidity and ensure space to allocate other expenses, in 2000, the Fiscal Responsibility Law (FRL) limited
staff costs by up to 60% of the RCL. Furthermore, Article 22 of that legislation created a prudent limit, defined as 95% of the ceiling (or
57% of RCL), above which the creation of offices, positions or functions are sealed, in addition to other restrictions.
PAGE 14
Graph 7: Distribution of municipalities by grade of IFGF Staff Costs
57.3%
49.8% 48.2%
37.1%
29.1%
24.4%
19.0%
15.8%
10.6%
2.1% 4.2%
2.6%
D
C
B
A
IFGF Investments
The indicator measures the share of the budget allocated to investments.
Basic sanitation, quality schools and hospitals, paved roads are examples of municipal investments able to
increase worker productivity and promote the population's welfare. However, the increased budget
commitment to the civil service payroll has left less room for investments. At this point, it is worth
mentioning the importance of municipalities: they accounted for 45.0% of all public investment made in
the country in 2015.
Last year, all government levels reduced their investments, which fell to 1.5% of GDP, the lowest level since
the series began with municipal data in 2006. The results of the IFGF 2015 indicate that investments cuts
were intense and widespread: 3,043 (64.9%) cities have invested less than in 2014. Thus, the average
percentage invested by Brazilian municipalities was only 9.0% of the Current Net Revenue (RCL), well
below the historical average of 11.1%. As a result, the IFGF Investments fell to 0.4278 points, the lowest of
all the series. In all, the municipalities were responsible for a 15% drop in public investment in the country, a
R$11.4 billion reduction in investments.
Over the past 10 years, cities have never invested so little.
More than half (2,549, 54.4%) of Brazilian municipalities did not even invest 8% of their RCL and therefore
earned grade D in IFGF Investments. This percentage is half of that observed in 2011. In this group, it is
worth noting that the only capitals that remained in that group for the second consecutive year were Rio
de Janeiro and Boa Vista.
In the intermediate bands, the number of municipalities with grades C and B increasingly reduced. In 2015,
23.1% of the municipalities (1,084) were with grade C, while 11.6% (542) had a grade B. The graphs below
illustrate the reduction in the number of municipalities in bands A, B and C and the significant increase of
municipalities with grade D in IFGF Investments.
Graph 8: Evolution of IFGF Investments
0.6149
0.6277
0.6069
0.5579
0.5527
0.5520
0.5067
0.4562
2006
2007
2008
2009
0.4319
2010
2011
2012
2013
PAGE 15
0.4278
2014
2015
Graph 9: Distribution of municipalities by grade of IFGF Investments
54.4%
40.7%
33.4%
25.3% 26.4%
23.1%
22.3%
16.2% 17.9%
17.7%
11.6%
D
C
B
10.9%
A
IFGF Debt Costs
Assesses the commitment of Real Net Revenues with the payment of interest and
repayment of loans contracted in previous years.
Most Brazilian municipalities do not have access to the credit market, making difficulty with the payment of
interest and amortization concentrated in very few municipalities, mostly the larger ones. In 2015, 3,779
municipalities have never declared Consolidated Net Debt. However, although there are only a few
indebted municipalities, they are the most populous ones, concentrating 60% of the national population. In
fact, the average population of the municipalities that have Consolidated Net Debt is 64 thousand
inhabitants, more than three times the average of municipalities that have not declared debts.
As important as the debt size is to know the budget share committed to the payment of interest and
amortization. That is, besides the size of the debt, the charges arising must also be monitored. As well as
staff costs, these costs have strict contractual obligations, which make them an inflexible factor of the
10
budget. To have an idea, only 16 of the analyzed municipalities have debt above the limit 120% of RCL
imposed by Federal Senate Resolution 40/2001. Nonetheless, they spend on average just 3.0% of RLR on
interest and debt repayment.
Indebtedness with the Union is not a problem for municipalities: 3,779 municipalities have never
claimed to have Consolidated Net Debt.
In 2015, Brazilian municipalities continued to be well evaluated in IFGF Debt Costs that, despite having a
slight decrease compared to 2014, remained the best of monitored indicators (0.8358 points). In IFGF Debt
Costs in 2015, 68.6% of the analyzed municipalities (3,214) received grade A and 1,173 (25.0%), grade B. At
odds with these results 250 (5.3%) cities were evaluated with grade C and 51 (1.1%) with grade D - this
means that only 6.4% of Brazilian municipalities had some difficulty with the payment of interest and
amortization. In this group attention was drawn to the capitals São Paulo (SP), Belo Horizonte (MG) and
Maceió (AL). The graphs below show the evolution of the IFGF Debt Costs.
It is worth noting that for the next few years, several municipalities will have a relief as to payment of debt
interest and repayments due to the Complementary Law 148/2014, authorizing the rescheduling of the
11
municipal debts with the Union under new refinancing conditions .
10
Itapé - BA, São Paulo - SP, Campinorte - GO, Planalto - BA, Nazaré da Mata - PE, Una - BA, Várzea Alegre - CE, Campos Verdes GO, Itororó - BA, Santa Luzia - BA, Bela Vista de Goiás - GO, Aurelino Leal - BA, Pilar - AL, Montes Claros de Goiás - GO, Barreiros - PE,
Coremas - PB.
11
Instead of the IGP-DI plus interest of 9% per year, the debt has to be managed by the IPCA plus 4% interest per year, limited to the
rate of the basic interest rate variation (Selic).
PAGE 16
Graph 10: Evolution of IFGF Debt Costs
0.8087
0.8021
0.7923
0.7954
0.8065
0.7980
0.7928
2006
2007
2008
2009
2010
2011
2012
0.8306
0.8427
0.8358
2013
2014
2015
Graph 11: Distribution of municipalities by grade of IFGF Debt Costs
68.6%
57.0% 55.0%
30.7%
34.0%
25.0%
8.9% 8.3%
3.4% 2.6% 1.1%
D
5.3%
C
B
A
IFGF Liquidity
The indicator verifies the relationship between payments postponed to the next
fiscal year and the cash and cash equivalents available to cover them, i.e., if the
cities are deferring payments of expenditures until the following financial year
without adequate coverage.
Over the past few years, faced with the biggest budget commitment with mandatory spending, the
maneuver of postponing expenses via outstanding liabilities became institutionalized as a source of
financing of expenditure not only for municipalities but also for the states and the federal government.
Faced with this situation, it is important to distinguish municipalities where the postponement of expenses
is a result of the budgetary imbalance from those where this mechanism is being used as a strategy. In
practice this means checking whether municipalities are leaving cash to cover outstanding liabilities
deferred to the following year. By measuring the cash sufficiency of Brazilian municipalities, taking into
account the size of their budget, IFGF Liquidity facilitates clarifying this question.
The data show that more and more municipalities have used the postponement maneuver of paying
expenses via outstanding liabilities. Since 2008, the cash commitment level of municipalities with
outstanding liabilities from the previous year has evolved significantly. In 2015, on average, municipalities
have ended the year with 57.6% of committed cash expenses from the previous year, almost twice that
observed in 2007 (30.4%).
Negative Record: 1,450 Brazilian municipalities (30.9%) closed 2015 with resources fully committed to
outstanding liabilities.
In 2015, IFGF Liquidity reached 0.4429 points, the lowest level since 2006. The proportion of cities with
grade D reached 30.9% in 2015, the worst result in nine years. This means that 1,450 cities closed 2015 in
PAGE 17
12
the red, and therefore, received a zero score in IFGF Liquidity - among them, six are Capitals: Belém, Belo
Horizonte, Campo Grande, Florianópolis, Goiânia and Teresina. In addition, 38.0% of municipalities (1,783)
were with grade C. Consequently, the percentage of municipalities well evaluated in this indicator receded:
31.0% of cities were with grades A or B, the lowest percentage since 2007. The graphs below show the
evolution of IFGF Liquidity.
Graph 12: Evolution of IFGF Liquidity
0.4875
0.4807
0.5071
0.4915
0.4808
0.4871
0.4451
0.4450
0.4429
2014
2015
0.3976
2006
2007
2008
2009
2010
2011
2012
2013
Graph 13: Distribution of municipalities by grade of IFGF Liquidity
39.0% 37.7% 38.0%
30.9%
30.0%
23.4%
19.7%
19.3%
15.7%
D
C
15.6%
B
15.4%
15.3%
A
12
To calculate the index, it was agreed that if municipalities submit more outstanding liabilities to pay than resources in cash their
scores will be zero. Although this condition is mandatory only in years of transitional government (article 42 of the LRF) to initiate a
year with more debts with suppliers than cash resources is a problem that affects the financial management and the council's
credibility. In reading the results, the closer to 1.00, the less the municipality is delaying payments to the following year without proper
coverage.
PAGE 18
HIGHEST AND LOWEST
In the year that municipal finances reached the worst situation in 10 years, to achieve a good position in
the overall ranking demanded the municipalities to have a good fiscal discipline, translated into an efficient
financial planning and a history of low budget commitments with strict spending (especially staff). The
graph below shows that there is a real gap between the 500 municipalities in better fiscal situation and the
500 worse off.
Graph 14: Average score of IFGF and its fiscal management indicators
0.8714
0.8025
0.6783
0.6382
0.7686
0.6883
0.4983
0.2172
0.1945
0.1299
IFGF
0.1070
IFGF Own Revenue
0.0688
IFGF Staff Costs
IFGF Investments
IFGF Liquidity
IFGF Debt Costs
Bottom 500
Top 500
With economic activity in sharp decline, the Union and states’ revenues braked. As a result, the reduction in
transfers - the main source of municipal resources - affected the budget program of most Brazilian
municipalities, which have been forced to postpone expenditure to the following year, pre-committing
revenues in 2016. Thus, the IFGF Liquidity was the aspect that contributed to separate the wheat from the
chaff in terms of fiscal management. In fact, while 425 of the 500 last placed receive a zero score in IFGF
Liquidity, among the top 500 there were only six cities in this situation. Similarly, while in the IFGF Top 500,
195 municipalities had top marks in IFGF Liquidity, there were none registering that score among the
lowest 500.
The way municipalities allocated their resources between current expenditure and investments was also a
determining factor to be situated at the top or bottom of the fiscal management ranking. Among the 500
well appraised cities, the average percentage spent with the civil service payroll was 48% of the Current Net
Revenue (RCL), in contrast to the 65% observed in the 500 last placed.
Of course, the greater budget rigidity due to the higher commitment to the staff payroll limited investments
in improvements for citizens. Evidence of this is that the 500 best placed municipalities invested on
average 15% of their revenues, whereas the cities at the opposite end of the ranking invested only a quarter
of that (4%). Therefore, while 312 municipalities of the first group received grades A or B in IFGF
Investments, in the second, only seven cities exceeded 0.6 points.
Finally, the low level of own income indicator in the two groups shows that dependence on state and
federal transfers is a deficiency including many municipalities in the Top 500, although with less intensity.
Even in this group, nearly half of the cities (219) had a critical level in IFGF Own Revenue (score less than
0.4 points). As for the interest and amortization liabilities, these are problems for few municipalities,
especially for the large ones.
From a regional perspective, the comparative analysis between the highest and lowest IFGFs leaves no
doubt that the exaggerated Brazilian economic and social inequalities extend to fiscal management. In the
geo-referenced map (adjacent) the areas in red (grade D) represent the 500 worst cities in the country with
regard to the fiscal situation, and the areas in blue (grade A) and green (grade B) represent the top 500.
PAGE 19
Clearly, the lower ranked municipalities are concentrated in the Northeast, which accounts for 384 (76.8%)
of the red spots on the map. The Southeast appears a distant second, with 75 (15.0%) representatives,
followed by the North with 25 (5.0%), the South with nine (1.8%) and the Midwest with seven (1 .4%). On the
other hand, among the municipalities with the highest marks, 227 (45.4%) are in the south, 139 (27.8%) in
the Southeast, 74 (14.8%) in the Midwest, 35 (7, 0%) in the Northeast and 25 (5.0%) in the North.
Map: Geographic distribution of the 500 highest and 500 lowest IFGF results in 2015
PAGE 20
CAPITALS
In 2015, capitals concentrated 22.7% of the Brazilian population (45 million people) and managed 27.1% of
the municipalities held resources. Unlike the other municipalities, where in many cases there is not even an
adequate accounting framework for fiscal management, capitals have greater access to the tools needed
for efficient administration. However, they have the challenge of providing goods and services to a higher
number of people.
The public accounts situation of the capitals is also the worst in 10 years, with the IFGF Staff Costs, the
IFGF Liquidity and IFGF Investments reaching the lowest level of the series started in 2006. The diagnosis
of capitals is similar to the other municipalities. The fall in own revenues has come up against the high
rigidity of budgets on staff expenses. Thus, the capitals have increased the commitment of the current net
revenue with the payroll, which in 2015 was 51.3% on average. In 2007, it was much lower: 47.1%.
Given this, there was a massive cut in investments and the postponement of expenditure via outstanding
liabilities, just as has occurred with the states and the Federal administrations. On average, the capitals
invested only 7.5% of the RCL in 2015, compared to 9.1% in the previous year. In turn, the outstanding
liabilities commit 72% of future budgets, a higher percentage than in 2014 (56%). Never before such low
investment and high volume of outstanding liabilities among the Brazilian capitals have been noticed.
Nevertheless, the fiscal situation of the capitals is better than the municipalities. While the IFGF Brazil fell by
7.5% compared to 2014, the average of the capitals IFGF fell 4.5%; this was 37.3% above the national level:
0.6083 against 0.4432 points. Therefore, 2015 was the year with the highest number of capitals in the top
100 results in the country - six achieved this ranking. Nevertheless, no capital showed excellence in fiscal
management (grade A in the IFGF). In addition, twelve recorded distraught fiscal management (grade C in
the IFGF), the highest number of the series.
The 1st and 2nd of capital ranking placements were gained by Rio de Janeiro and Rio Branco respectively.
The two municipalities committed only a little of their budgets with strict spending and allocated a good
portion of revenue for investments. So they were the only ones to blend low staff costs (grade B in the
indicator) and a high level of investments (grade A).
The capital of Rio de Janeiro state has maintained the top position since 2013. In addition to a high
capacity for own revenue generation (a maximum score in this indicator for generating more than 50% of
its revenues), the city's investments were above 20% of the RCL in the last five years, giving it grade A in this
indicator. In 2015, this capital invested the equivalent to 25.7% of the RCL, a result explained by the
infrastructure works needed to host the Olympic Games. In recent years, the city has also reduced its
interest expense and amortizations reaching in 2015 the best result in IFGF Debt Costs since 2006. Despite
the first place, the municipality's points in the general IFGF reached the lowest level in five years, driven by
worsening IFGF Staff Costs and IFGF Liquidity against the previous year.
Salvador,, Boa Vista,, Fortaleza and São Paulo completed the capitals group, which were among the top
100 IFGF Brazil. Despite the low level of investment, Salvador had the maximum score in IFGF Own
Revenue and IFGF Liquidity and moved up to 3rd place in the capitals ranking. In the 4th place, Boa Vista
arranged a high level of investments, while maintaining low cost with interest and amortization and good
liquidity. Consequently it earned grade A in all three indicators, highlighting the top marks in IFGF
Investments and IFGF Liquidity. In turn, Fortaleza achieved the 5th position, thanks to its increase in own
revenue.
In the 6th place, São Paulo had an increase of 3.4% in the general IFGF compared to 2014. Being the only
capital to present grade A in IFGF Staff Costs, spending on the civil service in São Paulo city accounted for
33.7% of the Current Net Revenue in 2015, against 51.3% of the capitals average. Furthermore, it is worth
noting its advance in IFGF Debt Costs, for which its score has nearly tripled. This jump is explained by the
debt index changes for states and municipalities, which provided São Paulo city government a sharp
reduction in interest and amortization expenses. However, the capital's Consolidated Net Debt reached
185% of the Current Net Revenue in 2015, well above the 120% limit determined by Federal Senate
Resolution 40/2001. Regarding the level of investment, São Paulo city government invested in 2015 more
PAGE 21
than the average (10.4% of RCL against 7.5%), despite that this was the lowest level on record for the city
since 2011. Finally, the municipality's IFGF Liquidity reached the lowest value of the series (0.5769).
In 2015, six capitals had liquidity problems and received a zero score for this indicator for ending the year
with more outstanding liabilities than budget resources: Florianópolis, Goiânia, Belém, Teresina, Campo
Grande and Belo Horizonte. In the first five, the deteriorating liquidity was accompanied by the high
commitment of revenue with the civil service payroll, which exceeded 50% of the RCL. Emphasis on
Florianópolis that committed 58.8% of its revenue on staff costs, a percentage very close to the legal limit
of 60%, while in Belo Horizonte the liquidity problem was added to the grade C in IFGF Investments and
IFGF Debt Costs. It is worth noting that the Minas Gerais State Capital has been presenting liquidity
problems for at least 10 years.
In relation to the South of the country, the penultimate placed, Florianópolis, was not the only one to
present difficulties with liquidity, Curitiba earned grade C in this regard. It is worth noting that low
investment also prevented a better performance in the general IFGF of Porto Alegre and Curitiba, cities
that occupied intermediate positions in the capitals ranking (11th and 15th, respectively).
In comparison with the previous assessment, São Luís was the biggest highlight due to the significant IFGF
improvement: a growth of 21.8%. In the capital ranking, it jumped from the 25th to the 20th position. In
addition to increasing own revenue, it managed to recover from previous years’ liquidity crises. Cuiabá also
excelled in the capitals ranking by jumping from the 20th to the 7th place after growing 15.3% compared to
2014, due to lower budget impairment with staff costs and increased investment.
The most significant drops in the capitals occurred in Macapá (-33.5%), Campo Grande (-29.0%) and
Belém (-26.4%). Campo Grande and Belém are among the capitals that received a zero score in IFGF
Liquidity as they finished 2015 without sufficient funds to cover the outstanding liabilities left for the
following year. Also, Macapá stood out negatively by its high commitment of revenue with the civil service
payroll: 73.9% of the RCL, significantly higher than the determined 60% threshold in the LRF.
Brazil
State
Ranking
Municipality
Brazil
28
38
46
58
74
100
163
180
268
307
413
427
487
668
684
1.019
1.052
1.070
1.189
1.308
1.653
1.755
1.817
1.929
1.982
3.014
RJ
Rio de Janeiro
AC
Rio Branco
BA
Salvador
RR
Boa Vista
CE
Fortaleza
SP
São Paulo
MT
Cuiabá
ES
Vitória
SE
Aracaju
RO
Porto Velho
RS
Porto Alegre
AM
Manaus
PE
Recife
TO
Palmas
PR
Curitiba
MG
Belo Horizonte
RN
Natal
PB
João Pessoa
AL
Maceió
MA
São Luís
PI
Teresina
MS
Campo Grande
GO
Goiânia
PA
Belém
SC
Florianópolis
AP
Macapá
Capitals Average
IFGF 2015
0.4432
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
0.7908
0.7750
0.7659
0.7507
0.7318
0.7207
0.6863
0.6820
0.6580
0.6498
0.6284
0.6266
0.6156
0.5921
0.5903
0.5550
0.5524
0.5506
0.5391
0.5284
0.4998
0.4911
0.4861
0.4775
0.4737
0.3973
0,6083
IFGF 2014
0.4792
1
2
4
3
5
6
20
11
12
9
16
14
7
10
23
17
19
21
22
25
24
8
26
13
15
18
Change.
15/14
IFGF
Own
Revenue
Staff
Costs
Investments Liquidity
Debt
Costs
-7.5
C
D
C
C
C
0.7986
-1.0%
B
A
B
A
C
A
B
0.7799
-0.6%
B
B
B
A
A
B
0.7185
6.6%
B
A
B
D
A
B
0.7752
-3.2%
B
D
C
A
A
A
0.7109
2.9%
B
A
B
C
B
A
0.6967
3.4%
B
A
A
C
C
C
0.5954
15.3%
B
A
B
C
C
A
0.6759
0.9%
B
A
B
D
B
B
A
0.6517
1.0%
B
B
C
D
A
0.6836
-4.9%
B
B
C
D
A
A
0.6233
0.8%
B
A
C
D
B
B
0.6470
-3.2%
B
B
B
C
C
B
0.6921
-11.1%
B
A
C
C
C
B
0.6768
-12.5%
C
B
C
D
B
A
0.5202
13.5%
C
A
B
D
C
B
0.6210
-10.6%
C
A
B
C
D
C
0.5971
-7.5%
C
A
C
D
C
B
0.5897
-6.6%
C
B
C
D
B
A
0.5873
-8.2%
C
B
C
D
B
C
B
0.4337
21.8%
C
B
C
D
C
0.5026
-0.6%
C
B
C
B
D
A
0.6912
-29.0%
C
A
C
C
D
A
A
0.4227
15.0%
C
A
C
D
D
0.6485
-26.4%
C
B
C
C
D
B
0.6273
-24.5%
C
A
C
C
D
B
0.5972
-33.5%
D
D
D
D
B
A
-4.5
B
A
C
C
C
B
0,6371
PAGE 22
PAGE 23

Editoração IFGF Inglês

Transcription

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