By Lise Alves, Senior Contributing Reporter
SÃO PAULO, BRAZIL – After years of planning and implementing new infrastructure works, Rio de Janeiro will host the 2016 Olympics and Paralympic Games. The Games, according to the latest estimates, cost at least 43 percent more than initially budgeted and although the mega sports events may increase retail sales and boost tourism in the city for the next two months, the benefits are expected to be short-term.
According to the non-governmental organization Council on Foreign Relations (CFR) the estimated final cost of the Rio Olympics is now at US$20 billion, when the initial budget called for expenditures near US$14 billion.
Although every Olympics since 1960 has gone over budget, says CFR, Brazil, the first South American country to host the Olympics, faces a number of additional challenges including a weakening economy, and the impending impeachment of its President, Dilma Rousseff.
The report, along with other recent analyses, hint to the fact hosting the Games may not be all that beneficial to Rio and Brazil in the long run. In May, risk agency Moody’s released a report which said that one of the most apparent benefits of hosting the Games would be the infrastructure improvements made in the city.
“Olympic-related investments will drive long-lasting infrastructure improvements in public transportation and urban mobility for the host city,” said Barbara Mattos, a Vice President, Senior Credit Officer at Moody’s.
The analysis said that although Rio would register temporary boost in tax revenues the agency cautioned that once the events were over, the city, as well as the country would fall back to one of the worst recessions in its history.
“New infrastructure projects promise the most lasting benefits to the city, while Brazil’s beleaguered overall economy will not get a significant boost from hosting the games … [and] hardly budge Brazil’s still-contracting economy,” said the analysis.