Political Structure as Determinant of Federal Spending

This article seeks to analyze the allocation of federal government discretionary spending among Brazil’s states. In Brazil, the bulk of federal public budget must be compulsorily executed. Personnel expenditures and social taxes, social security benefits and a series of constitutionally mandatory transfers to states and municipalities are examples of expenditures over which the government has no discretionary powers whatsoever. Even the vast majority of current expenditures can be considered compulsory, since they finance the government’s operations. Although the budget is heavily constrained by these expenditures, the Executive retain approximately R$ 20bn at its disposal for discretionary spending in 2003, equivalent to 6% of total expenditures, mainly comprising new programs or expansion of existing programs and public investments.