Arrest of Rio de Janeiro Governor highlights deep cracks in state finances

A frail economy, a bankrupt state, and a political system in tatters: welcome to Rio de Janeiro. Brazil’s second-wealthiest state is set to register primary deficits for the next decade, with a surplus estimated to happen only in 2029. Only in twenty years will Rio be capable to fully pay its debt to the federal government. The lack of money has taken its toll on every area under the state administration’s watch. Civil servants face delays in receiving their salaries, healthcare units don’t work properly, violence rates have spiked. In short, Rio de Janeiro is a mess.

And a big chunk of the blame lies on the doorstep of the state’s political class. Corruption seems to be present in every aspect of Rio’s political life, a perception that grows stronger as the Federal Police arrested Governor Luiz Fernando Pezão this morning. He is accused of pocketing a monthly stipend of BRL 150,000 during his time as the state’s lieutenant governor (a system of bribes which included a yearly “Christmas bonus” and two separate BRL 1 million bonuses).

Pezão was,...