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Brazil Has Yet Another Big Mess on Its Hands After State Default

  • Rio Grande do Sul defaults on payment to federal government
  • Brazilian states face growing strain as economy sputters
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Engulfed by political and economic crises, Brazil can ill afford to be beset by more problems.

Yet that’s exactly what is happening after its southernmost state of Rio Grande do Sul defaulted on a 280 million real ($80.9 million) payment to the federal government this month -- the first since the nation’s municipal-debt meltdown in 1997. The state, proportionally the most-indebted in Brazil, is in such distress that it didn’t pay salaries to public workers in July.