In 2023, half of Brazil’s municipalities were in dire fiscal straits, with a staggering deficit of R$17.9 billion ($3.42 billion) reported by the National Confederation of Municipalities (CNM).
The main culprits behind this financial crisis were declining transfer revenues and mounting public expenses, worsened by the post-pandemic recovery and a weakening federal pact.
Budget expert Cesar Lima pointed out that municipalities were facing reduced revenue while being burdened with increasing services mandated by federal laws.
The study also highlighted the disparity between federal contributions and municipal expenses, with the government providing inadequate support for essential services like school transportation.
As a result, municipalities struggled to meet their financial obligations, especially in an election year.
The study revealed a significant increase in current expenditures on education, social assistance, and health, surpassing personnel costs.
Additionally, there was a notable surge in social sector employment in municipalities.
This fiscal crisis underscores the urgent need for the federal government to step up its financial support for local services to ensure the well-being of Brazil’s cities.