Olympic state facing ‘collapse’
The governor of the Brazilian state of Rio de Janeiro declared a state of financial emergency yesterday, requesting federal funds to help fulfil obligations for public services during the Olympics, which start on August 5.
In an official decree published by acting governor Francisco Dornelles, the state government said the crisis could cause a ‘‘total collapse in public security, health, education, transport and environmental management’’.
The measure was intended ‘‘to call the attention of the whole society of Rio to the problems the state has, opening the way for us to take very tough measures,’’ Dornelles said.
Coming less than two months before the city hosts its first Olympic Games, the move stunned many in the Olympic city.
The announcement followed this week’s visit to Rio de Janeiro by Interim President Michel Temer, who said the federal government would ensure obligations are met.
The city is expecting about 500,000 foreign visitors during the Olympic Games.
‘‘This will have no impact on the Games,’’ said Mario Andrada, executive director of communication for Rio 2016.
‘‘We knew since last year that the financial state of Rio state was critical. We work with them every single day. They have fulfilled all their obligations for the Games. They created a state law for tax breaks that we were able to use.’’
Although the majority of Olympic infrastructure costs have been This will have no impact on the Games. We knew since last year that the financial state of Rio state was critical. Executive director of communication for Rio 2016 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 state of Rio expects a budget deficit of over 19 billion reals (NZ$7.9b) this year as spending planned before oil prices fell outstrips revenue that is tumbling during Brazil’s worst recession since the 1930s.
Rio state’s debt has been downgraded several times.
On Wednesday, Fitch Ratings knocked its 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.