Impactos da pandemia da Covid-19 no resultado fiscal dos municípios mineiros

Abstract

The COVID-19 pandemic caused severe economic instability, significantly impacting public finances at all levels of government. In 2020, the federal government recorded its highest primary deficit in the historical series, totaling R$ 743.1 billion. As municipalities receive the smallest share of national tax revenue, they were expected to be the most adversely affected. However, studies indicate otherwise. Thus, the objective of this dissertation is to investigate, through a fixed-effects panel data econometric model, how the COVID-19 pandemic impacted the fiscal performance of municipalities in the state of Minas Gerais. Data were collected from SICONFI, covering the period from 2017 to 2023. The analysis showed that, although the best fiscal outcomes were recorded in 2021, two years later, in 2023, municipalities registered the worst performance in the historical series. In this context, municipalities were grouped into four categories based on their primary result performance in 2017 and 2023, in order to assess the influence of selected variables within each group. The “below-below” group includes municipalities that were below the average in 2017 and remained so in 2023. The “below-above” group was below average in 2017 but above in 2023, while the “above-below” group had the opposite trajectory. Finally, the “above-above” group includes municipalities that performed above average in both years. The explanatory variables were organized into two dimensions: fiscal (CAPAG, dependency on intergovernmental transfers, revenue forecasting consistency, interest payments, solvency index, and the Municipal Fiscal Inflexibility Index - IFFM) and mayor characteristics (gender, age, education, and election year). The results indicate that lower payment capacity (CAPAG) is associated with worse primary results, especially among municipalities with weaker post- pandemic performance (2023). Dependence on transfers had a negative effect in better-performing groups, while in contexts of fiscal deterioration, such as the “above-below” group, it had a positive effect, suggesting a compensatory role during the crisis. Regarding the revenue forecasting consistency variable, a higher coefficient was observed for groups below the average in 2023, indicating that collecting more than budgeted has a stronger impact on the primary result for municipalities with poorer fiscal performance. Among the mayoral characteristics, older age was associated with worse fiscal outcomes, while higher education levels contributed positively—particularly in the “below-above” group, which showed improvement in the primary result. The gender variable, in turn, was not statistically significant in the models. The election year variable showed varying effects, with a positive impact in the “below-below” group, possibly due to the constraints imposed by the Fiscal Responsibility Law (Article 42), which limits the assumption of new financial obligations at the end of the term.