Financial Sustainability in Local Governments: Measured by Fiscal Performance.

Abstract

The expansion of fiscal imbalances affects the functioning of fiscal federalism and the financial sustainability of local governments. The objective of this article is to determine the level of financial sustainability of Mexican municipalities through the fiscal performance index. The quantitative method was obtained with the multivariate technique of factor analysis to build the fiscal performance index. The results show that the highest fiscal performance does not have north-south geographic relationships, which are observed in the lowest performances. The originality of the study lies in proposing an index to determine the levels of financial sustainability. The main findings show wide fiscal imbalances, with the southeast region performing the worst and the main limitation of the study is the lack of information on the quality of public services.