Rio de Janeiro’s governor declared a state of financial emergency Friday
and requested federal funds to help fulfill obligations for public
services during the Olympics that start Aug. 5.
Emergency
measures are needed to avoid “a total collapse in public security,
health, education, transport and environmental management,” a decree in
the state’s Official Gazette said.
The state’s revenue, largely tied to the petroleum industry, slumped in the last two years as global oil prices collapsed.
The
announcement followed this week’s visit to Rio by Brazil’s Interim
President Michel Temer, who said the federal government would ensure all
obligations are met for a successful Games.
Rio
is expecting about 500,000 foreign visitors during the Olympics, which
has coincided with Brazil’s worst recession since the 1930s and a
political crisis that last month led to the suspension of President
Dilma Rousseff.
“The
state’s financial emergency in no way delays the delivery of Olympic
projects and the promises assumed by the city of Rio,” Mayor Eduardo
Paes said on Twitter.
He
also underscored that legacy construction projects, with the exception
of an 8.79 billion-real expansion of Rio’s metro that is expected to be
finished just days before the Games open, are the responsibility of the
city and that most have been completed.
The
local organizing committee for the Games said the state’s fiscal
situation did not impact its actual running of the Olympics, which
relies entirely on private funds.
While
the majority of Olympic infrastructure costs have been spread across
city, state and federal budgets, with some financing from private
companies, the state is responsible for most day-to-day security and
health services in Rio.
The
financial pinch resulted in a 30-percent cut in the state’s security
budget – just as Rio has seen a jump in homicides and assaults in recent
months, raising concerns about safety ahead of the Olympics.
The
state of Rio expects a budget deficit of over 19 billion reais ($5.56
billion) this year as spending planned before oil prices fell outstrips
revenue that is tumbling during Brazil’s recession.
Rio state’s debt has been downgraded several times.
On
Wednesday, Fitch Ratings downgraded Rio’s debt rating to ‘B-‘ from
‘B+’, saying the state was suffering “a fast-deteriorating liquidity
position.”
Since
late last year, the state has been forced to delay pension and salary
payments and shutter some schools and hospitals, where crucial supplies,
including medicines and syringes, are lacking.
Brazil
is also facing an outbreak of the Zika virus, which has been linked to
the birth defect microcephaly in which babies are born with abnormally
small heads frequently associated with developmental issues.
($1 = 3.416 Brazilian reais)
