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Rio declares financial emergency ahead of Olympics

With the 2016 Olympic Games rapidly approaching, the state of Rio de Janeiro has declared a financial emergency. Authorities say the move is needed to prevent a 'total collapse' in public security and health.

The governor of the Brazilian state of Rio de Janeiro declared a "state of public calamity" Friday over a major budget crisis, requesting additional federal funds to finance the Olympic Games, which are set to begin in August.

The state's Official Gazette said the emergency measures are needed to avoid "a total collapse in public security, health, education, transport and environmental management."

The move will allow acting Governor Francisco Dornelles to adopt exceptional measures to finance obligations related to the Olympics as Brazil grapples with its worst recession since the 1930s.

"Any institutional instability would hurt the country's image," said the decree, signed by Dornelles. 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.

The announcement came shortly after interim President Michel Temer visited the Olympic host city of Rio de Janeiro. He said the federal government would ensure there would be sufficient funds to finance the games and related costs.

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Recession hits hard

While the majority of Olympic infrastructure costs have been spread across city, state and federal budgets, the state is responsible for most day-to-day security and health services in Rio.

But the state of Rio expects a budget deficit of over 19 billion reais ($5.56 billion, 4.9 billion euros) as low oil prices have taken a toll on revenue.

The shortfall resulted in a 30-percent cut in the state's security budget - just as Rio has seen a jump in homicides and assaults in recent months. With nearly 500,000 foreign visitors expected for the Olympic Games, the cuts have prompted safety concerns.

Brazil is mired in its worst recession since the 1930s, with the economy shrinking 3.8 percent last year. Observers including the International Monetary Fund are predicting a similar contraction this year.

Government workers including police have seen paychecks delayed amid the cash shortage, and retirees have protested because of unpaid pensions.

The nation is also grappling with a political crisis that last month led to the impeachment and suspension of President Dilma Rousseff, as well as the outbreak of the Zika virus, which has been linked to the birth defect microcephaly in babies.

bw/sms (Reuters, AFP, AP)

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