Municipalities in Portugal face new challenges, requiring reinforced capacities in strategic financial management, with special emphasis on local revenue raising. They will be faced with further reduction in intergovernmental transfers and greater accountability and transparency of local financial management. These new challenges occur simultaneously with increased local responsibilities and the new roles in providing local public services and merit goods. The LFB analysis was conducted in two Portuguese cities with different location and different size. Porto is located in the North region of Portugal and Beja is a city located in Alentejo, South of Portugal.

The present study has been proved to be very useful as a tool of municipal self-evaluation. Therefore implementation of this survey in other municipalities will be very useful, especially if municipalities of different size, urban/rural areas, high/low density areas, ultra-peripheral regions, etc are included.

Rating of local finance is a useful external indicator of the management quality. It will be a useful tool for local executives to analyze the improvements in municipal financial management. The comparison in time instead of a cross sectional comparison will be also useful, because it will support municipalities of different characteristics and implementing different management agendas.

• Full Report 2013