An analysis of the sustainability of Brazilian municipal public debt: verification of the existence of unitary root and co-integration of debt/surplus series/Uma analise da sustentabilidade da divida publica municipal brasileiro: verificacao da existencia de raiz unitaria e cointegracao das series de divida/superavit

• Published in: GeSec : Revista de Gestão e Secretariado 2023-11, Vol.14 (11), p.19704
• Main Authors: Serrano, Andre Luiz Marques, Cardoso, Vanessa Rodrigues dos Santos, Pansani, Daniel Azevedo, Wilbert, Marcelo Driemeyer, Mendes, Nara Cristina Ferreira, Neumann, Clovis, Ferreira, Lucas Oliveira Gomes, Martins, Patricia Helena dos Santos
• Format: Article
• Language: Portuguese
• ISSN: 2178-9010; 2178-9010
• DOI: 10.7769/gesec.v14i11.3150

Reducing revenue and maintaining or increasing expenditure in real terms result in unsustainable fiscal positions. As a consequence, there are increasing indices of public indebtedness, observed in the federal and state spheres and reflected in the Brazilian municipal environment. Although intra-governmental revenue transfers represent a constitutionally foreseen way of reducing regional economic inequalities, this mechanism tends to increase the dependence of municipalities on states and central government. In 2000, the Fiscal Responsibility Law was enacted, with the aim of establishing greater governance to the Public Administration, establishing limits on expenses and indebtedness, including for municipalities. In this context, this article aims to analyze the sustainability of the aggregate municipal public debt in the period of validity of the Fiscal Responsibility Law, by checking the existence of unitary root and co-integration of the debt/GDP and primary surplus/GDP series, as well as analyzing the behavior of the surplus as a function of economic growth and interest rates, specifically with annualized monthly data in the period between December 2002 and August 2016. The results indicated the sustainability condition from 2002 to 2015, but further testing showed unsustainability from March 2015, a condition that extended until August 2016, even after the fiscal loosening, whose effects arose in February 2016.