Influence of budget deviation on the economic performance of local governments

This study examined whether the existence of budget deviation influences the economic and financial performance of local governments in the state of Santa Catarina. To analyze the effective deviation, four (4) variables were combined: one dependent variable -economic performance -and another independent variable -budget deviation; the dependent variable was composed of four (4) sub-variables: Budgetary Revenue Realization Indicator (IRRO), Budget Execution Indicator (IEOC), Credit Operations Indicator (IOC), and Funded Debt Amortization Indicator (IADF). During the data analysis, linear regression and descriptive statistics were applied to verify the possible influence of the budget deviation on the economic performance. The results showed that the deviation positively influences the budget performance. It also revealed that when the deviation occurs due to spending less than was set in the initial budget, the influence is positive; however, when the deviation occurs due to spending more than was set in the initial budget, the influence is negative.