Description: Brazil : Issues in Fiscal Federalism

Brazil : Issues in Fiscal Federalism

The globalization of financial markets, has increased international pressure on the federal governments to maintain a hard budget constraint, with respect to sub-national governments. Because growth in sub-national deficits undermines investor conf...

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Bibliographic Details
Main Author:	World Bank
Language:	English en_US
Published:	Washington, DC 2013
Subjects:	FISCAL FEDERALISM FISCAL DEFICITS FISCAL MANAGEMENT FINANCIAL MECHANISMS GLOBALIZATION BUDGET CONTROL SUBNATIONAL GOVERNMENT INVESTOR CONFIDENCE DEBT CRISIS DEBT MANAGEMENT FOREIGN INVESTMENTS POLITICAL BIAS REGULATORY FRAMEWORK MARKET ECONOMY INSTITUTIONAL MANAGEMENT BOND REGULATION BANKING SYSTEMS CREDIT EFFECTIVENESS PRIVATE CAPITAL FLOWS ACCESS TO CREDIT INTEREST RATE PARITY INFRASTRUCTURE FUNDING RATE OF RETURN REGULATION MACROECONOMIC STABILITY SUBSIDIES GOVERNMENT GUARANTEES PRIVATE BANKS FISCAL REFORMS PENSION SYSTEMS LIABILITIES (ECONOMIC) ASSETS AUTHORITY AUTONOMY BANKING SECTOR BLOCK GRANTS BOND MARKETS BORROWING BUDGET DEFICIT BUDGET LIABILITIES CAPITAL CITIES CAPITALIZATION CENTRAL GOVERNMENT CIVIL SERVICE COALITIONS COMMERCIAL BANKS CONSTITUENCY CONSTITUTION CONSTITUTIONS COUNCILS COURT SYSTEM DEBT RELIEF DEBT SERVICE DECENTRALIZATION DECREE DEMOCRACY DISTRICTS ELECTED OFFICIALS EMPLOYMENT EXPENDITURE EXPENDITURE ASSIGNMENT EXPENDITURE RESPONSIBILITIES FEDERAL GOVERNMENT FEDERALISM FINANCIAL CONTROL FINANCIAL INSTITUTIONS FINANCIAL MARKETS FISCAL FISCAL CONTROLS FISCAL POLICY FISCAL RESPONSIBILITY FISCAL YEAR FOREIGN INVESTMENT FOREIGN TRADE GOVERNMENT BANKS GOVERNMENT INTERVENTION GOVERNMENT OFFICIALS IMPEACHMENT INFLATION INSURANCE INTEREST RATES INTERGOVERNMENTAL RELATIONS INTERGOVERNMENTAL TRANSFERS LACK OF ACCOUNTABILITY LAWS LEGISLATION LEGISLATURES LEVEL PLAYING FIELD LEVELS OF GOVERNMENT LOCAL GOVERNMENT LOCAL GOVERNMENTS LOCAL TAX LOCAL TAXES MANDATES MATURITY MEMBER STATES MONARCHY MUNICIPAL GOVERNMENT MUNICIPAL GOVERNMENTS MUNICIPAL SERVICES MUNICIPALITIES MUNICIPALITY NATIONAL LEVEL PARTY AFFILIATION PENSIONS POLITICAL CRISIS POLITICAL ELITES POLITICAL POWER POLITICIANS POPULISM PRESIDENCY PRESIDENTIAL CANDIDATES PRESIDENTIAL ELECTIONS PRESIDENTS PRIVATE SECTOR PRIVATIZATION PRIVATIZATION PROCEEDS PROVISIONS PUBLIC DEBT PUBLIC EMPLOYMENT PUBLIC SECTOR PUBLIC SERVICE PUBLIC SERVICE DELIVERY PUBLIC SERVICES PUBLIC UTILITIES PUBLIC WORKS RETIREMENT REVENUE ASSIGNMENT REVENUE SHARING REVENUE SOURCES SAVINGS SAVINGS SCHEMES SENATE SOCIAL ASSISTANCE SOCIAL SECURITY SOVEREIGNTY SPECIALIZED BANKS STATE ASSEMBLIES STATE BONDS STATE GOVERNORS STATE PARTICIPATION STATE REVENUE STRUCTURE OF GOVERNMENT SUBNATIONAL DEFICITS SUBNATIONAL GOVERNMENTS TAX ASSIGNMENT TAX BURDEN TAX REFORM TAX REVENUE TAX SHARING TAX SYSTEM TREASURY TURNOVER TAXES UNFUNDED MANDATES UTILITIES VOTING WAGES WATER SUPPLY
Online Access:	http://documents.worldbank.org/curated/en/2002/06/1807519/brazil-issues-fiscal-federalism http://hdl.handle.net/10986/15417

Description
Summary:	The globalization of financial markets, has increased international pressure on the federal governments to maintain a hard budget constraint, with respect to sub-national governments. Because growth in sub-national deficits undermines investor confidence, the federal government is under pressure to enforce the new debt control system, if only to keep the foreign investment flowing, and, political support for enforcement of the fiscal rules may also have increased. Nevertheless, there is the case for shifting the system of sub-national debt control from one that depends on central regulation, to one that relies more on markets. The report looks at institutional models for doing so, which include bond markets, and specialized banks. If the market model is to prevail in Brazil, changes in the credit environment must occur: private long term funds must become available, at interest rates compatible with infrastructure investment returns. But continued macroeconomic stability, and declining federal deficits are required before implementing the market model; private lenders must have a level playing field, and, limitations on subsidized government lending is necessary to attract private sector interest; the federal government should refrain from extending implicit guarantees on private loans to sub-national governments, while establishing a pattern of non-interference in sub-national defaults to private banks; and, reforms should remove obstacles that prevent sub-national governments from becoming creditworthy. Likewise, the growing state pension liabilities challenges the present system of fiscal controls.

Brazil : Issues in Fiscal Federalism

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