Transparency in the planning for the use of mining royalties in Brazilian municipalities

Abstract

This article aims to contribute to the debate on public governance and planning for the use of mining royalties revenue in Brazil. A classification methodology according to levels of transparency was proposed to evaluate the transparency of mining royalties used in Brazilian municipalities' budget planning. Four levels of transparency were defined and built in alignment with the legal framework regulations on the information that should be available in the municipal budget projections. This methodology was applied by case studies with the thirty leading Brazilian mining municipalities that received the highest transfer of mining royalties in the last five years. The analysis of this sample consisted of evaluating the Annual Budget Laws from 2019 to 2022. It was found that in most of these municipalities, the share of royalties in total revenue was greater than 30%, reaching as much as 75% in the annual budget forecast. Regarding transparency, the results show that in sixteen of the thirty municipalities, it was not possible to assess which expenses and areas of public administration the revenues from mining royalties were allocated, worth US$ 5.6 billion between 2019 and 2021. The results point out that only 38% of the municipalities in the sample meet the most basic criteria of public budget transparency, such as periodic publication of data and clarity in the presentation of information. In general, there is no tendency of compliance with the transparency criteria in the 4-year analysis, while some municipalities kept or improved their standard, others reduced their levels of transparency in budget planning, revealing a gap to be overcome for mining municipalities to comply with legal regulations.