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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.

Brazil, Rio de Janeiro, Francisco Dornelles
Rio de Janeiro’s acting governor, Francisco Dornelles, announces delay in wages for retired state employees, photo by Carlos Magno/Imprensa RJ.

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.

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5 COMMENTS

  1. total mismanagement by criminals…..pensions could be paid if they were skimming off the funds….

  2. Problem isn’t the decline in tax money. It’s the fact that the price of crude oil on the international market has gone from U$ 100 to U$ 50.
    Brazil heavily depends on its oil income as main source its annual budget.

  3. Since 2005 the state development bank BNDES has lent out over R$815 billion at less than the value of inflation. That money has been borrowed from the government and state pension funds. The government liability is currently for 14.5%. BNDES receives 6%.

    This money has been lent, via the National Champions Scheme to the billionaires of Brazil. The justification was that Brazil’s largest corporations could become winners internationally. Eike Batista lost R$31 billion of this money.

    Perhaps the most famous company involved is AmBev, owner of Budweiser, Stella Artois, Brama, Antartica and 200 other brands of corn adulterated beer. Thanks to the Brazilian National Champions Scheme AmBev is now registered and headquartered in Belgium.

  4. Correction: AmBev is a subsidiary of the controlling company Anheuser-Busch InBev, which is headquartered in Belgium.

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