BRAZIL’S FINANCE MINISTER ANNOUNCES POSSIBLE AID PACKAGE FOR RIO

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BRAZIL FINANCE MINISTER QUICK ECONOMIC RECOVERY

Brazil’s Finance Minister, Henrique Meirelles, has affirmed on Wednesday that a deal to help the state of Rio de Janeiro might actually be possible. While he offered no specifics, Meirelles said that the deal should come by the end of next week.

The federal government will give Rio a three-year grace period during which the state will not need to pay its debts. In exchange, the state must put into place a strict austerity plan. Governor Luiz Fernando Pezão has also agreed to privatize the state’s water company.

With the deal, Rio will be able to contract loans from public banks. A deal with Caixa Econômica Federal is already in place.

Meanwhile, civil servants of Rio de Janeiro are yet to receive the full amount of their November paychecks. Today, the state deposited the fourth of five installments for their November paycheck.

Poor management

Rio’s government blames the state’s dreadful financial situation on the fall of oil prices – its main source of revenue. However, that only tells one part of the story.

In addition to the fall in petrol prices, which caused Rio to lose 1 billion bRL in royalties, the state has made innumerable poor financial decisions. Not only are multiple ex-governors either in jail or under investigation for political corruption, but even the capital’s mayor has had his accounts frozen.