Fiscal institutions of Brazilian municipal borrowing

Martell, Christine R.

doi:10.1002/pad.474

Cited by 19 publications

(17 citation statements)

References 14 publications

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“…Therefore, the higher the current surplus, the better the issuer can cope with debt repayments. Martell [15] states that lower borrowing rates are related to higher revenues and lower expenditures. Bastida et al [16] also state that a surplus on current accounts reduces sovereign credit spreads; therefore, the ratio of current savings to current revenues (current savings as current revenues minus non-financial current expenditures) is controlled in their model.…”

Section: Internal Financial Factors Determining Lgs' Cost Of Debtmentioning

confidence: 99%

Municipal Bond Debt and Sustainability in a Non-Mature Financial Market: The Case of Italy

2018

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Local government (LG) debt increased worldwide during the past decade. Yet, LGs need increased access to financing so they can maintain and expand their community’s infrastructure. Expanding an LG’s bond-related debt (while continuing to meet ongoing debt-service obligations) is essential to its sustainability. An LG must both contain its credit risk and make its risk profile available to potential investors. Credit risk determinants in mature bond markets (e.g., the U.S.) have received considerable attention while those in non-mature markets have not. This paper contributes to the sustainable development literature by (a) identifying the risk-premium drivers in non-mature markets (using the bond market for Italian LGs as an example); and (b) providing LG policymakers with guidance on formulating policies to reduce their debt cost (either directly, by targeting its determinants, or indirectly, by improving the bond market’s functioning). LGs with comparatively high financial dependency on other governments, high criminal activity, and low operating revenues incurred higher bond-related costs than LGs without these characteristics. These LGs can improve their sustainability by (a) providing transparent and understandable financial information to potential investors; (b) reducing criminal activity; and, (c) increasing the frequency of external auditing.

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Section: Internal Financial Factors Determining Lgs' Cost Of Debtmentioning

confidence: 99%

Municipal Bond Debt and Sustainability in a Non-Mature Financial Market: The Case of Italy

2018

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“…Each has its strengths and weaknesses; rule‐based approaches generally lack flexibility, for example, and incite LGs to circumvent rules that do not provide sufficient conditions for sound financial management (Ter‐Minassian and Craig, 1997). In general, the models should not be considered overly technical (Martell, 2008; Bietenhader and Bergmann, 2010). Reform sequencing is critical, and should follow a thorough analysis of the context, including soft elements.…”

Section: The Theoretical Framework On Local Government Borrowingmentioning

confidence: 99%

The Albanian approach to municipal borrowing: From centralized control to market discipline

Cepiku

Mussari

2010

Public Admin & Development

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SUMMARYLocal governments (LGs) in transitional countries face pressing infrastructure needs, which, given the severe shortcomings of traditional funding, make a strong case for debt financing. This article explores the case study of Albania, using document analysis and interviews with mayors, civil servants, citizens and investors. We go beyond an analysis of technical aspects (macroeconomic conditions and legal constraints on borrowing) to include 'soft' elements (political and managerial issues, attitudes of key actors), with the aim of highlighting the approach adopted under current policies and the approach that should be adopted. Favorable macroeconomic conditions and the completeness of the legal framework have motivated policy-makers to choose the market model. Their aim is to develop the financial market rapidly; however, the development of sound management systems at the local level is largely ignored. We argue that the role of managerial capacities, public accountability and professional mechanisms is not adequately taken into account. Future policies need to make the best use of some early experiences of public participation and build upon the extensive training in accounting and auditing issues provided to local civil servants in order to exploit other models of municipal borrowing control.

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“…In Brazil, Martell (2008) found that the constraints imposed by fiscal arrangements have been effective in controlling expenditures and that long-term discipline is maintained through rule-based, not market-based, control. Braun (2006) discovered that in Argentina, fiscal rules have not worked because the federal fiscal institutions lead to a serious common pool problem that, in turn, causes a deficit bias.…”

Section: Evidence From Single Country Studiesmentioning

confidence: 99%

How Well Do Subnational Borrowing Regulations Work?

Martínez-Vázquez

Vulovic²

2016

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in Asian Development Bank InstituteThe Working Paper series is a continuation of the formerly named Discussion Paper series; the numbering of the papers continued without interruption or change. ADBI's working papers reflect initial ideas on a topic and are posted online for discussion. ADBI encourages readers to post their comments on the main page for each working paper (given in the citation below). Some working papers may develop into other forms of publication. The authors are grateful to Yasin Civelek for his excellent research assistance.The views expressed in this paper are the views of the author and do not necessarily reflect the views or policies of ADBI, ADB, its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms.Working papers are subject to formal revision and correction before they are finalized and considered published.Asian Development Bank Institute Kasumigaseki Building 8F 3-2-5 Kasumigaseki, Chiyoda-ku Tokyo 100-6008, JapanTel:+81-3-3593-5500 Fax:+81-3-3593-5571 URL:www.adbi.org E-mail: info@adbi.org AbstractThere are many positive aspects associated with subnational borrowing, including additional funding and promoting intergenerational equity. However, it may also endanger fiscal sustainability and macro stability due to moral hazard and soft budget constraints, making borrowing controls justified and common. This study reviews the different types of ex-ante and ex-post subnational borrowing regulations used in the international experience based on a large panel of developed and developing countries. Each type of regulations has advantages and disadvantages, with varying suitability to a country's circumstances.It is found that the presence of subnational tax autonomy contributes to an increase in the general government primary balance but not significantly for subnational primary balances. A history of subnational bailouts is associated with lower primary balances, on average, at all levels. The "golden rule" and limits on debt and borrowing appear effective at all levels of government. However, none of the broad types of subnational borrowing regulations seem to have a distinct significant direct effect on the narrow definition of fiscal sustainability at the subnational level.

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Fiscal institutions of Brazilian municipal borrowing

Cited by 19 publications

References 14 publications

Municipal Bond Debt and Sustainability in a Non-Mature Financial Market: The Case of Italy

Municipal Bond Debt and Sustainability in a Non-Mature Financial Market: The Case of Italy

The Albanian approach to municipal borrowing: From centralized control to market discipline

How Well Do Subnational Borrowing Regulations Work?

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