Rio de Janeiro declares state of financial emergency, seeks help for Olympics 2016

  • Rio de Janeiro has declared  a state of financial emergency
  • The state is requesting for federal funds to help it fulfill its day-to-day obligations for the upcoming Olympics in August
  • The state’s revenue has been going down simultaneously with the global oil prices

The governor of Rio de Janeiro, the Brazilian state, declared a state of financial emergency to the public last Friday and is requesting help to fulfill its obligations for the public during the Olympics which is slated to start on August 5.

The state’s Official Gazette said that emergency measures need to be put in place to avoid “a total collapse in public security, health, education, transport and environmental management.”

For the past two years, the revenue of the state has taken a dive alongside the collapse of global oil prices.

Interim President Michel Temer visited the Olympic city of Rio and stated that the federal government would ensure that the obligations are met for the world sporting event.

Over 500,000 foreign visitors are expected to travel to the city during the Olympic Games.

Majority of the costs for the Olympic infrastructure have been spread throughout the city; federal and state budgets. Some private companies also contributed to the funding. However, Rio is responsible for the funding of the costs of most of the daily security and health services.

Reuters reported that the state of Rio expects that its budget deficit will be over USD 5.56 billion for this year. The spending that has been planned for prior to the slump of the oil prices has stripped off revenue that continues to decrease during the country’s worst recession since the 1930s.

Fitch Ratings, one of the biggest crediting agencies, knocked up Rio’s debt rating from B- to B+. The agency said the state was suffering “a fast-deteriorating liquidity position.”

Rio’s state government is in such a bad condition that two of its hospitals were taken over by the Rio city government to allow doctors to keep being paid. Some police stations are also so underfunded that they have asked their neighbors to donate basic items like toilet paper. Public workers are experiencing months-long delays in receiving their money as well.

The state has been pushed to resort to delaying pension and salary payments and even shutting down schools.

Furthermore, Brazil is also facing an outbreak of the Zika virus; a disease that has been linked to birth defect microcephaly wherein babies are born with abnormally small heads.