Brazilian Cities Have Trouble Receiving Government Funds

By Richard Mann, Contributing Reporter

A survey carried out by the National Confederation of Municipalities (CNM) shows that 98 percent of Brazilian cities have fiscal problems and face obstacles in receiving funds from the Federal Government. If the law were to be applied strictly, these municipalities would not receive voluntary transfers of Federal resources at all. But many cities are extremely dependent on these transfers. 

According to the CNM, 5.452 municipalities are rejected by the Auxiliary Service of Information for Voluntary Transfers (CAUC). This system specifies fiscal requirements necessary for receiving funds from the Federal Government.

The data shows that only 116 cities have their information obligations up to date. This means that over five thousand cities have problems with the transparency of their accounts – a historical negative record – and are thus lacking much-needed funds for infrastructure work and investments.

To proceed with the expected payouts, the Federal Government requests that cities provide information such as the Summarized and Management Reports and the Annual Accounts Statement (DCA).

Most of the cities fail, however, to register the statements required by the Fiscal Responsibility Law (LRF).

Enforcing transparency is necessary to ensure that previously paid funds have been correctly used and not diverted or used in corruption schemes.

The CAUC has fifteen conditions that a municipality must comply with to prevent denial by the system. Among the requirements is the Accounting Balances Matrix (MSC) and the Public Debt Register (CDP).

According to the CNM, most cities have not provided reports of their expenditures in the areas of education and health, and are suspending several of the services that they provide to the population as a result.