Rio state authorities declared a "state of public calamity" over a major budget crisis in order to release emergency funds to finance the Olympic Games due to begin August 5.
The decree authorizes the state to "adopt all necessary emergency measures to ration essential public services in order for the Rio 2016 Olympic Games and Paralympic Games to take place," AFP reported.
"Any institutional instability would hurt the country's image," said the decree, signed by acting governor Francisco Dornelles.
On Friday morning, Rio state Finance Minister Julio Bueno said that if the state were a company, it would enter into judicial recovery. “I need the federal government to help me,” Bueno said, according to Brazilian news site G1, which reported a likely 2016 deficit of almost $6 billion for the state.
The August 5-21 Olympics and September 7-18 Paralympics in Rio de Janeiro will be the first to be held in South America.
The events pose "serious difficulties in delivering essential public services and could even cause a collapse in public safety, health, education, transportation and environmental management," the decree said.
Rio de Janeiro state is in financial straits due to the fall in global oil prices, while Brazil overall is floundering through a deep recession.
Police, teachers and other government workers in Rio state have seen paychecks delayed because of the cash crunch.
Retirees have protested because of unpaid pensions.
Brazil's economy shrank 3.8% last year, its worst recession in 25 years. The International Monetary Fund and the market are predicting a similar contraction this year.
Incredibly Worrying Situation
Amnesty International expressed concern at the cuts to social services, which could affect the training of security agents to work in the crime-ridden slums known as favelas.
The decision to cut services and security ahead of the Olympic Games "is not only a shock but is also incredibly worrying, especially given the bad history of police killings and murders," Amnesty's Brazil director, Atila Roque, said in a statement.
Rio's state budget shows a $5.6 billion shortfall for 2016. Royalties from oil the state's main revenue-earner are projected to collapse from $3.5 billion in 2014 to just $1 billion this year.
Dornelles urged the national government to step up, and pressed authorities to look at what public assets could be sold off to raise cash.
The state of Rio has 16 million inhabitants and relies heavily on royalties from the oil fields off its coast. Hit by falling revenues and the tumbling price of oil, the state has inched further and further into the red while a huge corruption crisis has left state-run oil firm Petrobras, one of Rio’s biggest companies, reeling.
Razor-Thin Increase
Economic activity in Brazil rose in April for the first time in more than a year of severe recession, but the razor-thin increase was smaller than analysts had expected, central bank data showed last Thursday, Reuters reported.
The Brazilian central bank's IBC-Br economic activity index, a gauge of activity in the farming, industry and services sectors, rose 0.03% in April from March after seasonal adjustments, the first increase since December 2014. A Reuters survey of 18 analysts had forecast a 0.3% increase in the indicator.
Brazil's economy is going through a second year of what analysts estimate to be its worst recession in more than a century. Activity fell 4.99% in April compared to the same month a year earlier.
The IBC-Br data for April, despite being weaker than expected, adds to signs that Latin America's largest economy could stabilize later this year. A record cane crush propped up industrial output in April, while stronger supermarket sales offered vendors some respite after months of losses due to high inflation.
Earlier, the Organization for Economic Cooperation and Development cut its economic growth forecast for Brazil, citing political and corruption concerns.
The Brazilian economy is now expected to contract by 4.3% this year, the OECD said. Production fell in all the three main economic sectors: agriculture, industry and services.
Exports were a rare bright spot, however, increasing by 6.5% compared with the fourth quarter after a sharp fall in the value of the currency, real.
