Rio de Janeiro State Cuts Social Programs to Reduce Deficit

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – Facing one of the worst economic crises in its history, the Rio de Janeiro state government announced Thursday a series of decrees to curb expenditure. Among the actions is the suspension of social programs and reduction of state secretaries, from 25 to 20.

According to acting governor, Francisco Dornelles the measures have the objective of saving between R$1 billion to R$2 billion. The state’s deficit however is approximately R$19 billion.

Among the social programs to be suspended after September is the Renda Melhor, a complement to the federal Bolsa Familia program in Rio de Janeiro. With the suspension government officials hope to save R$200 million.

The Bolsa Família social welfare program, introduced by the PT (Workers’ Party) government under former president Lula in 2006, grants cash transfers to low income families, provided that they continue to send their children to school.

The decrees issued also include that all state agencies reduce their operational expenditures by thirty percent, with the exception of the departments of health, education, public security and penitentiary administration. The housing, consumer defense, chemical dependency, healthy aging and quality of life and fishing and supply state secretaries will be transformed into departments in other bureaus.

The state government has also set a ban on international trips that do not have the objective of attracting investment or supervising contracts already signed. With the decrease in oil prices in the international market and Petrobras’ divestments in major oil fields along the state’s coastline, revenues from the sector coming into public coffers were reduced significantly. Revenues from petroleum royalties has always paid a big part of the state’s expenditures.

In April, the state government announced that due to cash flow problems it would not be able to pay over 137,000 state retirees, delaying pension checks until May.