O Endividamento Municipal na Região Norte de Portugal

Abstract

The Portuguese municipalities have a limited fiscal autonomy. The solution adopted to finance local authorities assures harmonization of local taxes and avoids distortions on location decisions of economic agents. In order to assure spatial equity, an important role is played by central government transfers, which are responsible for a large proportion of the municipality’s financial resources. Laws on local governments financing restrict the autonomy of municipalities in what concerns debt financing. The recent measures of budget control increased those restrictions. Therefore, the municipalities face a new challenge of finding the financial resources to promote their competencies. In this article we analyze the evolution of municipal debt in the Northern Region of Portugal and we develop some prospective scenarios of local government financing under the recent restrictions to municipal indebtedness.