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Rio state declares financial disaster before Olympic Games

The acting governor of Rio de Janeiro state has declared a state of financial disaster so he has more leeway to manage the state's scarce resources less than two months before Brazil hosts the Olympic Games.

Francisco Dornelles's decision will allow Rio's state government to change its budgetary priorities without breaching Brazil's fiscal laws.

The move will let Mr Dornelles adopt exceptional measures to pay costs related to the Games as the state grapples with the country's economic recession.

The Games are due to take place in Rio de Janeiro from August 5 to 21.

Mr Dornelles's office said in a statement that the decision was made because a dip in revenues from taxes and oil royalties was "stopping the state of Rio de Janeiro from honouring its commitment to the organisation of the Olympic and Paralympic Games.

"The financial crisis has brought several difficulties in essential public services and it could cause the total collapse of public security, health care, education, urban mobility and environmental management," the statement said.

Rio's state government is in such dire straits that two of its hospitals were taken over by the Rio city government to allow doctors to keep being paid. Some police stations are so underfunded that they have asked neighbours to donate basic items like toilet paper. Public workers and retirees have suffered months-long delays in receiving their money.

Mr Dornelles, previously the state's vice governor, became acting top executive when elected governor Luiz Fernando Pezao took a leave of absence to undergo cancer treatment.

Brazilian media said Mr Dornelles had asked the country's acting president Michel Temer for nearly 900 million dollars (£625 million) in emergency funds for the state government, but a decision was not announced.

Some of the key Olympic projects depend heavily on the state government.

Along with paying for state police during the Games, Rio de Janeiro state is also committed to paying for construction that will extend the metro to the Olympic Park as well as facilities to clean the waters sailors will use during the Games.

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