State of Rio de Janeiro Unable to Pay Pension Checks

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – The government of Rio de Janeiro announced on Wednesday that due to cash flow problems it would not be able to pay over 137,000 state retirees this month. Officials blame the sharp decline in tax revenues and the decrease of oil prices in the international market for the lack of funds.

Calling it a tragedy acting governor Francisco Dornelles said that only those retirees earning less than R$2,000 will receive their pensions in April. Officials admitted that the deficit in the state’s accounts have reached over R$18 billion.

“The country is facing a great recession,” justified Dornelles when announcing the measures, adding, “Rio may be the state most affected by this recession, but we want to reiterate our commitment stating that we will do all that is in our power to pay (pension, wages) before May 12th.”

Dornelles also stated that until all active and inactive state employees have received their wages and pensions, he and all his aides would not receive their salaries. According to officials the expenditures with social security payments and pensions have always taken a big part of the state’s revenues. These hefty expenditures, however, were always paid by Rio’s revenues, with petroleum royalties and participation payments.

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. Meanwhile, social security and pension payrolls increased by more than two hundred percent between 2007 and 2016, according to officials.

State officials also announced that the Christmas bonus to all state employees, suspended due to lack of funds at the end of 2015, will be paid by Monday, May 18th.