Brazil is perilously close to a municipal debt crisis. Five states including Rio de Janeiro and Mato Grosso do Sul have received court approval to delay some debt payments to the federal government as the worst economic contraction in 25 years chokes off their revenue, BDLive reported. It’s the latest example of how quickly state finances have deteriorated after Rio Grande do Sul defaulted on a payment to the government a month ago—the first since a municipal-debt debacle in 1997 required a federal bail-out. Together, the 26 states and the federal district owe the treasury at least 547-billion reais ($138 billion), the most in 15 years.
