Finance for Development: Is the Economic Model of the Decentralized Autonomous Government of Quevedo Sustainable?

Abstract

This study analyzed the financial situation of the Decentralized Autonomous Municipal Government of Quevedo during the 2024-2025 period, facing questions about economic sustainability due to high dependence on state transfers exceeding 60% of total income and budgetary rigidity that limited investment in basic public works for the canton's population. The purpose consisted of evaluating efficiency in municipal public resource management, institutional debt structure, and operational capacity to maintain real solvency in the short and medium term through exhaustive review of official financial statements directly from the entity. Quantitative descriptive methodology of documentary nature was applied with non-experimental longitudinal comparative design that examined balance sheets and comprehensive income statements for the complete period. Researchers organized primary data in computational matrices, calculated absolute and percentage variations through standard horizontal analysis, and interpreted specific indicators: current liquidity ratio (1.04), net working capital ($495,025), debt-to-equity ratio (0.07), financial autonomy (0.93), adapted ROA (-3.33%), operational margin (-35.197%), and fixed asset turnover (0.17%), all derived from primary accounting information formally provided by the Municipal GAD. Results confirmed 1.22% equity growth ($333M to $337M) driven by infrastructure investment that increased 121.76% ($8.18M to $18.14M), but evidenced critical liquidity below the 1.50 standard, accounts payable escalated 66.28%, net income contracted -62.37% ($12.27M to $4.61M), and financial expenses surged 140.49%. It was concluded that apparent equity solvency exists (15.02) but operational unsustainability requires strengthening local tax collection and optimizing accounts receivable management to balance current spending with genuine own revenues.