Could Brazil's Financial Crisis Lead to Olympic Cancellation?
It is not a likely scenario. But warnings of financial peril have begun to emerge from leaders in Rio de Janeiro, the host of the XXXI Olympiad scheduled to begin in August.
On Tuesday, Brazilian state governors and representatives for the city said Rio and other Brazilian states are quickly running out of money to pay for basic services. They warned a complete breakdown in public services could be looming if the Brazilian government--currently in a state of upheaval after the Lower House of Congress voted over the weekend to impeach President Dilma Rousseff--does not provide debt relief.
Salaries for public workers have been delayed repeatedly since the beginning of the year.
Rio de Janeiro Chief of Staff Leonardo Espindola said that the lack of financial infastructure could result in the state being unable to maintain hospitals or even fuel police cars.
"We're talking about the image of the country," Espindola said. "We are nearing a social collapse in our state."
Governors from the Brazilian states Sao Paulo, Minas Gerais, Rio Grande do Sul, Santa Catarina, Mato Grosso do Sul, and Alagoas argued their case before the Brazilian Supreme Court on Tuesday. They said the state governments should be allowed to pay a simple interest on debts owed to the federal government, rather than the current compounding interest required by law.
Brazilian Finance Minister Nelson Barbosa said that changing the way debts are calculated would have a profound affect on the legal situation surrounding the crisis.
"The governors' demand reflects an immediate problem that needs to be dealt with, but it's the wrong solution," Barbosa said.
The Court is scheduled to issue a ruling on the crisis on April 27.