Rio de Janeiro declares financial emergency ahead of Olympics

An electric tramway replaces numerous bus lines in the Rio de Janeiro city centre, in the run-up to the Olympics. The state says it is in need of emergency measures to avoid "a total collapse in public security, health, education, transport and envir
An electric tramway replaces numerous bus lines in the Rio de Janeiro city centre, in the run-up to the Olympics. The state says it is in need of emergency measures to avoid "a total collapse in public security, health, education, transport and environmental management". PHOTO: EUROPEAN PRESSPHOTO AGENCY

RIO DE JANEIRO • Rio de Janeiro's governor has declared a state of financial emergency and requested federal funds to help fulfil obligations for public services during the Olympics, which start on 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 last Friday.

The state's revenue, largely tied to the petroleum industry, slumped in the last two years as global oil prices collapsed.

The announcement followed last week's visit to Rio by Brazil's interim President Michel Temer, who said the federal government would ensure all obligations are met for the Games to be a success.

Rio is expecting about 500,000 foreign visitors during the Olympics, which coincide 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 stressed that legacy construction projects, with the exception of an 8.79 billion real (S$3.47 billion) expansion of Rio's metro train system that is expected to be finished just before the Games open, are the responsibility of the city and that most have been completed.

The local organising committee for the Games said the state's fiscal situation has no impact on the actual running of the Olympics, which relies entirely on private funds.

While the bulk of the Olympic infrastructure costs has been spread across city, state and federal bud- gets, 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 per cent cut in the state's security budget - with Rio seeing a jump in homicides and assaults in recent months, raising concerns about safety ahead of the Olympics.

Rio expects a budget deficit of more than 19 billion reais this year as spending planned before oil prices fell outstrips revenue that is tumbling during the recession.

REUTERS

A version of this article appeared in the print edition of The Sunday Times on June 19, 2016, with the headline 'Rio de Janeiro declares financial emergency ahead of Olympics'. Print Edition | Subscribe