“accounting services”), quantities, unit prices and total prices. In some cases, the item will separately describe the “quoted” prices, before the execution of the tender, and the price for the winning proposal. The item dataset also includes the name and document number of the winning entity, which can be a firm or individual. Each item is uniquely identified by the variable id_item_bd and can be connected to tenders by the variable id_licitacao_bd.

Finally, in the _tender-participant_ table each observation is a participant in a given tender. Some municipalities will only provide winners in each tender, so in that case these will be the same as those listed in the tender-item table. Others will include all participants in a tender, including those that did not win any contracts. The data includes names and document numbers of each participant, as well as an indicator of whether they are winners. Each participant is uniquely identified by the pair of variables documento and razao_social, and can be connected to tenders by the variable id_licitacao_bd.

# **2.2 Budget execution**

Budget execution refers to the implementation of the annual budget that is approved by the local legislature. While much of the analytical work presented in this paper focuses on budget execution of public procurement, the tables on budget execution include all activities performed by municipalities, including payment of salaries, transfers, and others.<sup>13</sup> The budget execution process in Brazil is similar to that in other countries.<sup>14</sup> It consists of three distinct steps: commitment, verification, and payment. The commitment ( _empenho_ ) phase is the moment when governments set aside part of the budget appropriated to them for a specific activity, such as buying goods from a supplier or paying salaries of health workers. From a budgetary perspective, this is often seen as the moment an expenditure is recognized, since committed amounts are deducted from the budget appropriation. The second step of the budget execution is the verification ( _liquidação_ ). It occurs when the government acknowledges that a certain service or good has been provided. This is the equivalent of recognizing a debt with a provider and is considered an expenditure from an accrual accounting point of view. In fact, if an expenditure was verified but not paid, it is recorded as accounts payable ( _restos a pagar processados_ ), and, as with firms, increases in this amount might reflect a deterioration in the ability of governments to meet short-term obligations.<sup>15</sup> The final step of the budget execution is the payment ( _pagamento_ ), when governments transfer the money to their suppliers.

> 13Brazil adopts a budget classification system (see here for more details) in which the economic classification of expenses ( _elemento de despesa_ ) is comprised of 69 groups that are identified by a two-digit code. For the analyses of the payment delays part of this paper, we restrict the data to three groups related to purchase of goods and materials: consumption material (code 30), material for free distribution (code 32), and equipment and permanent material (code 52).

> 14For an overview of recommended budget execution practices and a cross-country comparison, see Potter et al. (1999), Chapter 4.

> 15As of December 2022, the local and state governments registered as accounts payable to suppliers of goods and services (account _Fornecedores e Contas a Pagar a Curto Prazo_ ) a total of R$ 75.6 billion (or 0.76% of the GDP).

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