Crisis Makes Rio de Janeiro Suspend New Hiring

10/07/2016 - 14h42

One day after paying only part of the salaries of the state's public employees instead of the full amount, and thus, failing to comply with a Supreme Court order, the government of Rio de Janeiro state announced on Thursday, October 6, that it will suspend payments to product and service suppliers for 30 days.

The measure was made official in a decree signed by the state's acting governor, Francisco Dornelles (PP).

In practice, the state will not contract products and services for 30 days.

New loans also were suspended, as well as hiring employees for commissioned positions. The government said that it will pay only the employees working in the health care, education, security and prison administration areas and the agencies connected to the Judicial branch.

Only expenses whose invoices have already been issued will be paid. Services that would be performed, but had not been budgeted yet, will not be paid for. The Department of Finance says that the measure will lead to savings of R$ 173 million (US$ 54 million) for public coffers.

The goal is to improve, even if momentarily, the state's accounts, which have a R$ 13 billion (US$ 4 billion) deficit forecasted for this year.

Since the end of 2015, the state of Rio has delayed payments to service providers and equipment suppliers, as well as salaries, pensions and public retirement payments.

In June, shortly before the opening ceremony of the Olympic Games, the government declared a state of emergency due to its bad financial situation.

At the end of the day, Rio de Janeiro courts ruled the seizure of the state government's accounts due to the lack of payment of the public employees in accordance with the model established by the Supreme Court, which had issued a preliminary injunction that obliged the state to pay the full amount of its employees' salaries on the third business day of the month.

Translated by THOMAS MUELLO

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	Fabrizio Bensch/Reuters
	A general view shows the Olympic and Paralympic Village (back), where the athletes will stay during the competitions, near the 2016 Rio Olympic Park in Rio