Good morning! We’re covering today Rio de Janeiro’s financial collapse. And the 2020 budget—the first of the Bolsonaro era. (This newsletter is for platinum subscribers only. Become one now!)
Rio on the brink of bankruptcy
Rio de Janeiro residents woke up on Tuesday morning to the news that Mayor Marcelo Crivella had decided to suspend all payments made by the municipal administration—affecting government contractors and civil servants, with salaries also being suspended. “The goal is to tidy up the books. I hope to unfreeze the budget as soon as possible,” said state finance secretary Cesar Barbiero—without giving any indication of when payments will be resumed.
Why it matters. The move caps off years of corruption and awful administrations in Rio de Janeiro, driving Brazil’s most famous city to near bankruptcy—just three years after it hosted the Olympic Games.
Ruin. Economist André Luiz Marques, from the São Paulo-based Insper Business School, compares Rio’s current situation to a company going out of business. “Any firm entering a process of bankruptcy goes through the same process—it stops paying contractors, it tries to renegotiate debts.”
Total calamity. Rio de Janeiro is a true mess right now. The municipal healthcare network is paralyzed due to...