Brazil’s Minas Gerais Declares State of Financial Calamity

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The governor of Minas Gerais, Fernando Pimentel, declared a state of ‘financial calamity’ this week, claiming the state registers a deficit of R$8 billion due to the continuing increase in expenditures and a steep decrease in revenues. Minas Gerais is the third state in Brazil to announce ‘financial calamity’ since June.

“The decree will allow us to effectively avoid a collapse of public services in the state,” said Pimentel in a press conference on Tuesday. “The situation is very difficult in Brazil. We are working and we will use all the resources we have so that the population of Minas Gerais will not suffer the effects of this crisis,” added the official.

The measures allows one of Brazil’s largest states, Minas Gerais, to exceed the spending limit determined by Brazil’s Fiscal Responsibility Law and obtain loans to pay public servants’ Christmas bonuses and public services contracts.

It also makes it easier for the state to obtain federal financial aid. According to state officials, almost half of all of Minas Gerais’ revenues (47 percent) goes towards paying state employees wages, one of the highest percentages in the country. This, says officials, leaves a reduced volume of revenues to pay for social services and infrastructure.

Minas Gerais is the third state to declare financial emergency this year. In June, Rio de Janeiro state’s interim governor, Francisco Dornelles, alarmed international media by declaring a financial emergency in the state less than 45 days before the start of the 2016 Summer Olympics and Paralympics in the city of Rio de Janeiro.

At the end of November, it was Rio Grande do Sul’s turn to announce it did not