Fiscal Responsibility: Limitsand Possibilities for Public Management in Municipalities in the Interior of Tocantins – The case of Guaraí/TO

Abstract

This article analyzes the limits and possibilities imposed by the Fiscal Responsibility Law (LRF) on municipal public management, using the municipality of Guaraí, located in the interior of the State of Tocantins, as a case study. The central problem of this research is the municipality's high dependence on intergovernmental transfers, especially from the Municipal Participation Fund (FPM), and its impacts on budget planning and execution. Methodologically, this is a qualitative research study with a descriptive approach, based on bibliographic and documentary research, using as sources the relevant legislation, fiscal management reports, budget laws, official data from the municipal government, and information provided by control bodies. The LRF is an essential legal framework for fiscal control and for promoting transparency and balance in public accounts; however, its application in small and medium-sized municipalities reveals specific challenges related to low revenue-raising capacity and technical and administrative limitations. This study discusses the effects of the Fiscal Responsibility Law (LRF) on personnel expenses, public debt, investments, and municipal budget management, as well as pointing out administrative strategies capable of increasing legal compliance and contributing to sustainable local development. It concludes that, despite the restrictions imposed, the LRF can act as an instrument for inducing administrative modernization and institutional strengthening in municipalities in the interior of the country.