Three months after the Olympics, Rio de Janeiro is broke – USA TODAY
The Olympic Games are done and billions of dollars in spending were used to get ready for the games but now the state of Rio is broke. Jose Sepulveda (@josesepulveda87) has more.
From the front steps of Rio de Janeiro’s Municipal Theater, the ballet company danced, and opera singers belted out the strident “Carmina Burana.”
It was last month, and the show was an artistic public protest.Â The performers,Â allÂ state employees, havenât been paid for weeks and wonât be getting paychecks until Dec. 5.
The same day, outside a state-run hospital in Rioâs Tijuca neighborhood, a doctor shruggedÂ when asked about the long lines of people waiting to be treated. âItâs total chaos in there,â he says.
And in Rocinha, Brazilâs largestÂ favela, or marginalized neighborhood, 10-year-old Railene de los Santos frowns and gives a faraway look when asked about the threat of her local library closing, to save money.
âIf anyone closes my library Iâll kill them,â she says. âI love my library.â
Three months since the Rio de Janeiro Summer Olympics, the âmarvelous city,â as itâs known, is unraveling.
The state of RioÂ is broke. It hasnât been able to pay its bills since long before the games. A federal bailout kept police on the streets and hospitals open while Olympics tourists were in town. But now the money has dried up, and public employeesÂ arenât being paid.
The state government is voting on an austerity package that could slash state workers’ wages and pensions by 30%. Thatâs triggered violent protests and led demonstrators to briefly storm the state Legislature last month.
Meanwhile, crime is surging across the state. From January to October, murders increasedÂ byÂ 18%,Â and street robberies jumped byÂ 48%Â compared to the same time last year,Â according to the stateâs security institute.
The state of Rio owesÂ more than 107 billionÂ reaisÂ (about $31 billion) to the federal government and other lenders, according to the national Finance Ministry. In May, the state began missing debt payments to international creditors.
The stateâs finances have been pummeled by Brazilâs floundering economy and by the stagnant price of oil, which traditionally accounts for a lot of state income. A massive corruption scandal involving the Rio-based state oil company, Petrobras, has led to thousands of layoffs and only worsened the crisis. And the former governor isÂ accusedÂ of facilitating millions of dollars in bribes over building contracts for the soccer World Cup and the Olympics.
âI think the Olympics were like the last ball of the empire,â said Ciro dâAraujo, an opera singer who was protesting on the steps of the Municipal Theater last week. âWe threw a party but we knew that this was going to happen afterwards.â
The Olympics were never meant to be an economic panacea for Rio, but there was certainly hope that the games would boost the local economy. Instead, officials are now trying to figure out if tax cuts awarded to corporations involved with the Olympics actually worsened Rio stateâs financial situation.
One big reason Rio is in so much money trouble is that state lawmakers have a habit of giving huge tax incentives to companies that do business here. AnÂ auditorÂ foundÂ that RioÂ missed out on 138 billion reais (about $40 billion) in corporate taxes between 2008 and 2013. Thatâs almost twice the stateâs annual budget of about 80 billion reais.
Those tax breaks are supposed to encourage corporations to set up shop, bringing jobs and revenue to Rio. But in 2010, the state government also passed a vaguely worded resolution to grant tax breaks to 2016 OlympicÂ sponsors.
Now,Â auditors are trying to figure out how much that fiscal reliefÂ ended up costing Brazilian taxpayers, and whether corporations abused their incentives. A spokeswoman for the state auditor’s office wrote in an email that the agency is trying to establish which companies avoided paying taxes by citing the Olympics resolution, and how much money the state lost as a result.
Rio stateâs treasury secretary, through a spokesperson, declined to comment on the ongoing audit.
Political scientist and professor Mauricio Santoro, himself a state employee, says theÂ governmentâs policies have clearly failed residents of Rio de Janeiro.
âWhat we can say is that it was a bad decision from a financial point of view, and that giving these tax cuts did not result in jobs or economic growth to Rio,â Santoro says. âAnd now the state is broken, and it has to cut salaries and pensions, so hundreds of thousands of people are going to suffer very negative impacts because of these decisions.â
This article originally appeared on PRI.org. Its contentÂ was created separately to USA TODAY.
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