Economic growth and inflation rate: implications for municipal revenue and health expenditure of the municipalities of Pernambuco, Brazil.

This paper analyzes the implications of municipal budget revenue growth and the monetary policy's inflation rates goals in the availability of public health resources of municipalities. This is a descriptive, exploratory, quantitative, retrospective and longitudinal cross-sectional study covering the period 2002-2011. We analyzed health financing and expenditure variables in the municipalities of the state of Pernambuco, Brazil, describing the trend and the relationship between them. Data showed the growth of the variables and trend towards homogeneity. The exception was for the participation of Intergovernmental Transfers in the Total Health Expenditure of the Municipality. We found a significant correlation between Budget Revenue per capita and Health Expenditure per capita and a strong significant negative correlation between Inflation Rate, Budget Revenue per capita and Health Expenditure per capita. We concluded that increased health expenditure is due more to higher municipal tax revenue than to increased transfers that, in relative terms, did not increase. The strong inverse relationship between inflation rate and the Financing and Expenditure variables show that the monetary policy's inflation goals have restricted health financing to municipalities.