Rio de Janeiro said it’s running out of money to pay for basic services months before the Olympic Games while other Brazilian states warned of similar financial crises if the federal government doesn’t provide debt relief. Six state governors and a representative for Rio de Janeiro said on Tuesday their fiscal woes are forcing them to make cutbacks that could lead to a breakdown of social services. Rio has been delaying payment of salaries to public servants since the beginning of the year.
The states argued before the Supreme Court on Tuesday that the situation has become so dire that they should be allowed to pay simple rather than compound interest on debts owed to the federal government. The court will rule on the matter April 27, Justice Luiz Edson Fachin said. The change would cost the Treasury 313 billion reais ($88 billion) in lost revenue, according to the Finance Ministry. FULL REPORT