Dado Galdieri/Bloomberg

Brazil Police Clash With Rio Austerity Protesters Again

  • Civil servants protest cuts for second time in one week
  • Rio’s fiscal crisis a microcosm of Brazil’s problems

Police in Rio de Janeiro clashed with protesters outside the state legislature for the second time in a week on Wednesday, as representatives inside began discussions about a sweeping austerity package to shore up state finances.

Demonstrators tore down the fences separating them from the building and repeatedly climbed the steps to the entrance. Police wearing riot gear used tear gas to repel the protesters, many of whom carried banners from the state’s public sector unions. State police officers were among the demonstrators.

Protest in Rio on Nov. 16.

Photographer: Dado Galdieri/Bloomberg

Rio has become the face of the fiscal crisis facing many of Brazil’s states, and a microcosm of the resistance to the 20-year public spending freeze the federal government is steering through Congress in the capital. Government at all levels in Brazil has been hamstrung by falling tax revenue as the nation endures its deepest recession in more than a century. Ballooning pension obligations are also taking a toll on the country’s coffers. Rio, home to state-run oil company Petrobras, is particularly vulnerable, as low oil prices depress the royalties that the state counts on to sustain spending.

Rio is facing a deficit of close to 17.5 billion ($5.1 billion) reais this year, more than two-thirds of which is from the pension system RioPrevidencia. Rio’s governor, Luiz Fernando Pezao, wants to tackle the shortfall by raising taxes, delaying pay rises for the police and fire department, lowering the salaries of political appointees and boosting public servants’ pension contributions, among other measures. Failure to do so will cause the deficit to surpass 50 billion reais by the end of 2018, the government says.

Police stand guard in front of a security fence destroyed by protesters.

Photographer:Dado Galdieri/Bloomberg

The International Monetary Fund said at the conclusion of its so-called Article IV mission to Brazil that Rio epitomizes the fiscal crisis at the state level and that the dire situation of the states is understated by incomplete statistics. Last month, Standard & Poor’s announced it would stop rating Rio, citing a lack of adequate information.

“The subnational fiscal crisis requires a reform of public employment rules and a pension reform at the national level to alleviate the pressure coming from growing mandatory expenditures,” IMF directors said in their statement dated Oct. 31 and published Tuesday. “In Rio de Janeiro and possibly some other states, new sources of recurrent revenue also need to be considered.”

In a separate development, dozens of protesters in Brasilia managed to break into the chamber of the lower house of Congress on Wednesday afternoon. The demonstrators occupied the speaker’s podium, chanting slogans against corruption and in support of a military intervention.

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