20% of municipality-years have an average payment delay above 30 days, and many are above 45 or even 60 days. Overall, approximately 15% of the total amount paid in the procurement of goods and materials in recent years is made in more than 30 days.

In Figure 10, we present a map of the regions in Brazil included in our paper and color municipalities according to their average payment delay in 2018. Consistent with the distributions we plot above, we see that the majority of municipalities are paying their suppliers on average below 30 days, which are represented in dark and light green colors. Slow paying municipalities are often spread across the geography, but some clusters are clearly seen - the northeastern part of MG, for example, in the upper part of the "Southeast and South" region, is home to several municipalities that pay on average in more than 30 days.<sup>27</sup> This is also a region of lower-income municipalities, which suggests that perhaps payment delays are consistently correlated with local income – either because these are areas of lower state capacity or because local governments face budget constraints, for example.

We first document that, in that raw data, this relationship seems to be present: in Figure 11, we document a negative correlation between a municipality’s per capita GDP and their average payment delay – those with higher incomes pay their suppliers systematically faster. We then present in Table 5 a series of regressions documenting that this relationship is robust to other measures of payment timeliness. In all specifications, we control for the log of population and include state and year fixed-effects. In column (1), we show that municipalities with 1 log-point higher income (which is roughly moving from the 1st to 3rd quartile in the per capita GDP distribution) pay their suppliers on average 1.7 days faster - this is approximately an 8% increase in payment timeliness when compared to the sample mean of 21 payment delay. While the average payment delay is important, it is possible that suppliers care less about averages and more about the probability of extreme events, such as being paid later than a certain number of days. In column (2), we first document that 1 log-point increase in GDP is correlated with a 3.9 p.p. decrease in the probability of being paid after the 30-days limit, compared to a 19% baseline mean. Higher income municipalities are also less likely to pay in more than 45 or 60 days, as we document in columns (3) and (4).

Overall, these findings show that, while the majority of municipalities pay their suppliers on average within the time-frame determined by law, substantial variation still exists: 15% of payments are made over 30 days and payment timeliness seems to be systematically correlated with local per capita income.

# **5 Conclusion**

This paper introduced _MiDES_ – a new disaggregated and harmonized dataset on Brazilian local procurement and budget execution. We first described the dataset’s basic properties and 27We consider an alternative measure of payment delays in Figure A.5, the share of payments at the municipality level performed over 30 days, and observe a similar geographical pattern.

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