GOLD Report I - UCLG

185tection was organized for the unification andbetter coordination of the different socialsubsidies granted to poor families throughthe municipalities.III.4. Control Systems andDifficulties of IndebtednessThe expenditure of Latin American municipalitiesis subject to internal and externalcontrols. For internal control, the biggermunicipalities establish a municipal accountsoffice or audit unit –organs granted a certaintechnical autonomy. In municipalitieswith a weak structure, this task is entrustedto the municipal treasurer or the person incharge of finance.There are different models of external control.In some countries there is still a controlof the budget by national institutes whosefunction is to support, control and inspect.This is the case with the Dominican MunicipalLeague, but also with the Institutes forMunicipal Promotion or the ComptrollersOffices in some Central American countries.In Costa Rica, for example, municipal budgetshave to be approved by the controlaríabefore they can be allocated.In many unitary states, the external controlover the intermediate-level local governmentbodies is exercised by the Controlaria.Bolivia, Chile, Costa Rica, Ecuador, Guatemala,Nicaragua, Paraguay and RepúblicaBolivariana de Venezuela still maintain thisform of external control. In El Salvador andHonduras, control is exercised by the auditboard or the superior auditor body.In the federal countries, external control ismore complex, since both internationaland national entities intervene. Thus, inArgentina and Brazil external scrutiny ofthe mayor —intendente or prefeito— isconducted by the Deliberating Council orTown Council with the assistance of theprovincial or State Court of Auditors or theMunicipal Court of Auditors, created by theprovincial or state government. Should thefederation have transferred resources tothe municipalities, the audit would becarried out by the Court of Auditors of theUnion. The state legislatures are theorgans of oversight of the municipalities,although control of federal resources isexercised by the Superior Auditor of theFederation’s Office, which in turn dependson the Union Congress.In recent years, the problem of debt hasbeen a priority. Different countries face fiscalproblems through the indebtedness of thesub-national entities. Although in mostcountries sub-national government borrowingmust be approved by national government,this does not guarantee discipline;some countries are trying more innovativesolutions to avoid excessive borrowing 36 .In 1997, Colombia established a ‘trafficlight’ system for regulating sub-nationalborrowing relative to the level of debt incurredby the regional entity. The law establishesthe basis for territorial fiscaladjustment through borrowing performanceagreements that are controlled at nationallevel. These not only limit the debtcapacity, but also manage the repaymentof loans, essentially duplicating the IMFsystem internally. Other laws have complementedthis policy with good results.III.5. Public ServicesThe financial capacity of the municipalities isclosely connected to the delivery of publicservices. In the second half of the 20th Century,national and intermediate governmentsabsorbed public services which, according tothe principle of subsidiarity, are most effectivelyprovided by the municipalities. Newsupport for decentralization has begun toreverse the old approach 37 .The public services generally attributed tomunicipalities include the provision of:urban cleanliness, refuse collection andtreatment, drinking water, drainage andsewers, public lighting, town planning,parks, gardens and spaces for sport, markets,cemeteries and slaughterhouses,36. Law of fiscalresponsibility inBrazil (2000), the“semaphoresystem” inColombia – by Law358 of 1997, inEcuador, the Law ofResponsibility,Stabilization andFiscal Transparencyof 2002.37. Martín, Juan andMartner, Ricardo(coordinators),“Estado de lasfinanzas públicas:América Latina y ElCaribe”, cit. pp. 62and ff, see table 9on revenues andtotal expenditure atgovernment level.