RIO DE JANEIRO, BRAZIL – A report by TV Globo showed that Rio’s City Hall needs to raise R$7 billion (US$1.75 million) to reach its budget planned in early 2019.
However, there are less than 50 days left until the year ends. The city is already on “overdraft”, with a nearly R$2 billion shortfall.
Rio’s City Hall was expected to close the year with revenue of R$30.6 billion, but so far it has collected only R$23.4 billion.
The financial crisis scenario may become even worse. The money that would derive from ICMS (Tax on the Circulation of Goods and Services) and IPVA (Tax on the Property of Motor Vehicles) was blocked by BNDES (National Bank for Economic and Social Development).
The reason is the city’s default of R$280 million, as it failed to pay loans contracted in the Eduardo Paes administration to carry out works in the Olympics.
The IPVA and ICMS proceeds were pledged by the city government as collateral for the loan.
The first block occurred last week and the second was scheduled for last Tuesday, November 12th, since the transfers are carried out every week.
The state of municipal accounts has been in critical condition since 2018 when the Municipal Court of Auditors pointed out debts of over R$3 billion that remained for this year.
The effects of poor management of public money can be witnessed by Rio de Janeiro citizens every day when streets flood due to downpours, or when hospitals have no supplies to provide basic care to their patients.
Regarding the block on transfers due to defaulted loans from BNDES, the city government said that the debt is a “cursed legacy of past administrations” and that it will honor its commitments.
It further stated that it has already paid off virtually the entire debt with great effort and that the current priority is the population of Rio de Janeiro.
On the shortfall in the 2019 budget, the city government said that by the end of the year, it will collect the planned amounts.