Brazil’s Rio Declares Financial Emergency, Requests Funding for Olympics

Rio de Janeiro’s governor declared Friday a state of financial emergency and requested federal funds to help fulfill obligations for public services during the Olympics that are set to start on Aug. 5.

The governor warned of total collapse in public security, health, education, transport and environmental management, stressing the need for emergency measures to avoid such crises, 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.

Mayor Eduardo Paes tweeted: “The state’s financial emergency in no way delays the delivery of Olympic projects and the promises assumed by the city of Rio.”

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.

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 blow resulted in a 30-percent cut in the state’s security budget – just as Rio has seen a surge 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.

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)

Brazil’s Rio Declares Financial Emergency, Requests Funding for Olympics