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Municipal Fiscal Health in Colombian Main Cities

Author

Listed:
  • Gerson Javier Pérez-Valbuena

    () (Banco de la República de Colombia)

  • Jaime Bonet-Morón

    () (Banco de la República de Colombia)

Abstract

Local governments are primary providers of basic services to their communities, and any decision they make will echo in the economy as a whole. That is why healthy and sustainable local public finances should be a national priority. With the purpose of contributing to the discussion on subnational fiscal health, a recently developed approach by Slack (2017) is applied to the 23 main Colombian cities. After preparing a brief and general profile of each city, five dimensions are analyzed in-depth: external, financial, tax and revenue, debt, and infrastructure. Results highlight the high complexity of what making a fiscal health diagnosis of local governments implies. Colombian cities do not seem to face profound fiscal health issues. Nevertheless, there is evidence of regional differences, where coastal lagged behind Caribbean and Pacific cities seem to suffer of structural and long-term weaknesses. On the other hand, inner Eastern and Central cities’ issues are more related to cash-flows and shortterm sustainability. **** RESUMEN: Los gobiernos locales son los principales proveedores de los servicios básicos en sus comunidades y, por tanto, cualquier decisión que adopten se verá reflejada en la economía como un todo. Esta es la razón por la que finanzas públicas locales sostenibles y saludables deberían ser una prioridad nacional. Con el propósito de contribuir a la discusión sobre salud fiscal subnacional, en este documento se aplica, para las principales ciudades de Colombia, la metodología reciente de Slack (2017) en la construcción de indicadores de salud fiscal. Luego de preparer un perfil general de cada una de las ciudades, se analizan más detalladamente el comportamiento de indicadores en cinco dimensiones: externa, financiera, impuestos e ingresos, deuda, e infraestructura. Los resultados dejan en evidencia la alta complejidad que implica el análisis y diagnóstico sobre salud fiscal de los gobiernos locales. Las ciudades colombianas no parecen enfrentar, en general, profundos problemas de salud fiscal. Sin embargo, existe evidencia de patrones regionales, en donde las ciudades pertenecientes a las regiones Pacífica y Caribe parecen mostrar fragilidad estructural de largo plazo. Por otro lado, los desafíos de las regiones del interior, Oriental y Central en particular, están más relacionadas con los flujos de caja y la sostenibilidad de corto plazo.

Suggested Citation

  • Gerson Javier Pérez-Valbuena & Jaime Bonet-Morón, 2018. "Municipal Fiscal Health in Colombian Main Cities," Documentos de trabajo sobre Economía Regional y Urbana 274, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:region:274
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    References listed on IDEAS

    as
    1. Galvis-Aponte, Luis Armando & Meisel-Roca, Adolfo, 2011. "Persistencia de las desigualdades regionales en Colombia : un análisis espacial," Chapters,in: Bonilla-Mejía, Leonardo (ed.), Dimensión regional de las desigualdades en Colombia, chapter 1, pages 3-32 Banco de la Republica de Colombia.
    2. Jaime Bonet-Morón & Gerson Javier Pérez-Valbuena & Edwin Jaime Chiriví-Bonilla, 2016. "Informalidad laboral y en la vivienda: primeros indicios para las principales ciudades colombianas," Documentos de Trabajo Sobre Economía Regional y Urbana 014975, Banco de la República - Economía Regional.
    3. Ignacio Lozano & Hernán Rincón & Miguel Sarmiento & Jorge Ramos, 2008. "Regla fiscal cuantitativa para consolidar y blindar las finanzas públicas de Colombia," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 10(19), pages 311-352, July-Dece.
    4. repec:bdr:bdrcap:2017-12-191-231 is not listed on IDEAS
    5. Yaw Badu & Sheng Li, 1994. "Fiscal stress in local government: A case study of the tri-cities in the Commonwealth of Virginia," The Review of Black Political Economy, Springer;National Economic Association, vol. 22(3), pages 5-17, March.
    6. Jaime Bonet-Morón & Gerson Javier Pérez-Valbuena & Diana Ricciulli-Marin, 2017. "¿Hay pereza fiscal territorial en Colombia?," Documentos de Trabajo Sobre Economía Regional y Urbana 015910, Banco de la República - Economía Regional.
    7. Samuel B. Stone & Akheil Singla & James Comeaux & Charlotte Kirschner, 2015. "A Comparison of Financial Indicators: The Case of Detroit," Public Budgeting & Finance, Wiley Blackwell, vol. 35(4), pages 90-111, December.
    8. repec:spr:grdene:v:24:y:2015:i:4:d:10.1007_s10726-014-9406-6 is not listed on IDEAS
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    Keywords

    local public finances; regional economics; Colombia; finanzas públicas locales; economía regional;

    JEL classification:

    • H72 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Budget and Expenditures
    • R51 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Finance in Urban and Rural Economies

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