Corruption in Brazil #4 – Rio State Bankrupt?

Rio State is Bankrupt?

The crisis in Rio State has clearly gone beyond being “difficult to manage”. The fact is that Rio de Janeiro and the State of Rio are effectively bankrupt. The teachers who are on strike will not be paid this month, but then neither will the police, nor officials in the department of Transport DETRAN, nor health service employees, but nobody is clear exactly WHY there is no money in the State`s coffers to pay these regular monthly wage bills and departmental running costs.

“Rio de Janeiro is broken, bankrupt,” said Dr. Jorge Darze, president of Sinmed / RJ (Union of Doctors of Rio de Janeiro) – back in December 2015. Since then the State and the City has continued to pay out for the extension of the Urban Light Railway and other capital expenditures in order for the City to be ready for the Olympics later this year.

A “Crisis Cabinet” was set up by various official bodies at the end of last year to whom public money should be paid – The State Prosecutor’s Office, the MPF (Ministerio Publico Federal – responsible for many, if not most of the public employees), the State Public Defender, the Defender of the Union, the Union of Doctors – and they have already undertaken two lawsuits to insist the Governor`s Office pays money into the appropriate budgets to enable these areas to continue to meet their legal responsibilities, but the Governor has only partially responded.

“There is no money” says Rio Governor, Luiz Fernando Pezão. He blames the collapse of Royalties due from Petrobras, but Dr Darze pointed out that a Governor attempting to rely on an unstable income (i.e. the royalties) is committing an illegal act and could and should be impeached. This is a parallel with what is happening to President Dilma at the moment.

There is some irony, too, in the fact that the Governor is undergoing treatment for his cancer through privately arranged health insurance, but for a person unable to pay for such health insurance the public health system probably would not be able to afford to treat them. There are facilities lying unused because the money is not available to pay for doctors and nurses to staff them. Hospital pharmacies are short of drugs and people are being turned away from long queues seeking to get preventive injections against flu for the forthcoming “winter” season here. Research into the Zika virus in one research facility in Rio was being continued only because the lead researcher was recycling his own money into the project to pay for research materials for which the State should have been paying.

It seems that Rio State and Rio City have prioritised the Olympics over many public funded areas which are required by law, the health service, the Police and Education. The Governor has been accused of concentrating on funding the state as a place for the rich, rather than for ALL the people who live here. The demonstrations, which now seem to be a growing Wednesday phenomenon each week, were televised this week and many of the demonstrators, including teachers, police, emergency workers, DETRAN employees, were wearing T-shirts emblazoned with the word “BASTA!” – meaning “ENOUGH!”

The coordinator of education workers unions, Marta Moraes told reporters after Wednesday`s demonstration in Rio, that, in talks with the Vice Governor of the state, Francisco Dornelles, the Vice Governor said that if he was in their position he “would be doing the same thing”. It seems to me as an expat caught up in the crisis that it is time – in fact it is well beyond time – for a full accounting audit of where state funds have been allocated, where the law says they should have been allocated and how budgets were drawn up and prioritised. In other words – WHY is the State of Rio bankrupt? WHO is responsible?


Lunchtime TV news, Thursday. The teachers and other public sector employees should be paid on Wedensday of next week (14th April) but it appears that the possibility that this payment date will be met is shrinkingly small. The Federal Government has indicated it could make sufficient money available via a major LOAN to Rio State, but there is a condition on such a loan that teachers would have to agree to accepting their salaries would not increase for the next FOUR years, in order for them to get paid. In the absence of such a loan the situation will only get worse.

The Governor of Rio State has indicated that unless the State gets a loan of at least R$ 1 BILLION, the situation will continue to pose problems (R$1 Billion = £192million at today`s exchange rate) It is pretty clear that the teachers and other public sector employees would NOT accept the sort of conditions the Federal Government would impose.

It is also clear from TV news reports last night and today that the health service cannot perform any kind of elective surgery, only emergency surgery. Also the police service is trying to use only the internet for transfers of information simply because they cannot afford even to buy any paper, the budgets are completely out of cash for such purchases.


About Keith Melton - Green Lib Dem

Retired English liberal environmentalist living in Nottinghamshire; spent six years in Brazil. Author of Historical Novel - Captain Cobbler: the Lincolnshire Uprising 1536. Active member of the Green Liberal Democrats - (pressure group in Liberal Democrats) - was Founding Chair of GLD in 1988
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