ernment supplier and identify their location using publicly available data from the Ministry of the Economy. We then document that approximately 25% of purchases are from suppliers located in the same municipality, but with wide variation across entities. Local purchases are less prevalent in smaller municipalities, which could be driven by the scarcity of local suppliers, but they are no more or less common when we compare competitive vs. non-competitive purchase modalities.

Second, we document the extent of delays in payments to suppliers across municipalities in the country and how it correlates with municipal characteristics. Payment delays are considered one of the key barriers to the participation of small and medium-sized enterprises (SMEs) in public procurement since they often have less access to working capital loans and are unable to wait for longer periods of time before being paid by their clients (Barrot and Nanda, 2020; Breza and Liberman, 2017; Barrot, 2016; Conti et al., 2021). By law, public entities in Brazil are mandated to pay their clients in less than 30 days as a rule.<sup>7</sup> However, late payments are common – we document that 15% of all payments to suppliers of goods and services in recent years are made in more than 30 days, and 20% of municipality-year observations have an average payment delay over 30 days. Payment timeliness is also systematically correlated with local per capita GDP, with higher-income municipalities paying faster on average. The granularity of the data allows us to show that aggregate quantities, such as the average payment delay, might hide a strong variability in payment timeliness across suppliers and types of purchases. This is an instance in which microdata is crucial for a proper assessment of the quality of the budget execution process of a municipality.

The remainder of this paper is organized as follows. In Section 2, we provide further institutional details on procurement and budget execution in Brazil and present some statistics from our datasets. We then proceed to validate the quality of our budget execution data in Section 3, producing metrics of internal consistency as well as comparing aggregates constructed from microdata to information available at the SICONFI. In Section 4, we illustrate two applications of this new dataset. Finally, we conclude in Section 5 by discussing other avenues of research using these new data.

# **2 Institutional context and data**

Our dataset on public procurement and budget execution of Brazilian municipalities is constructed from data that TCEs assemble. The mission of these audit courts is to oversee the fiscal policy of states and municipalities, which includes taxation, spending, and budget execution. TCEs are present in each of the twenty-six Brazilian states plus the Federal District.<sup>8</sup>

> 7The Public Procurement Law (Law 8,666) contains most of the public procurement regulation. Article 40 describes the rules that govern payment conditions. See also here for a summary of payment rules.

> 8In the states of Rio de Janeiro and São Paulo, the TCEs oversee all municipalities apart from the capitals, which have their own audit court. Three states – Bahia, Goiás, and Pará – have two audit courts: one that oversees the state government and one that oversees all municipal governments within the state.

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