After quarreling with bankers and creditors for weeks, the mayor of Rio de Janeiro has publicly declared the city in a state of bankruptcy.
The coffers of this city, long the proud flagship of Brazil, are now so empty that there are no funds left to pay teachers, suppliers or contractors.Mayor Saturnio Braga said in a dramatic television speech Thursday night that there would be no money even to pay the salaries of the city's 104,000 employees.
"All our federal income is blocked and we are not able to borrow a cent," said the mayor gravely. "The situation is more than serious."
In the handsome palace that houses the town hall, worried city officials Friday elaborated on the ills of this city of about 9 million inhabitants, now the second largest city of Brazil.
With debts of $150 million abroad and more than $130 million at home and no loans in sight, they said, the city's fate now depends entirely on the even more debt-ridden federal government.
Some repercussions of being broke, they noted, are already looking critical.
Contractors who have not been paid for months have suspended public works projects. Public hospitals, officials said, have begun to suffer serious shortages. And within days, food stocks will run out for school meals, often the only meal of the day for pupils from poor neighborhoods.
"It's a drama, but then, New York went broke and pulled through," said Andrea Bacha, an official of the Bank of Rio de Janeiro. "We would like to know what recipe they used."
Braga, a 57-year-old economist, has blamed the national government for his plight.
As Brazil slides ever deeper into its general economic crisis, the federal government has frozen virtually all municipal and state funds.
To make matters worse, city officials said, the treasury has also failed to disburse most of the money pledged to help the city recover from storm damage early this year. But the city has already spent those funds.
And even the mayor's sharpest critics concede that with inflation estimated at close to 700 percent this year, almost any budget is unmanageable.
"The city mostly lives off taxes, but by the time today's taxes are collected several months from now, they're worth half or less," says Andrea Bacha. "The hole only gets bigger. There is no way to catch up."
Water, this city's bliss and beauty, in recent months has also become its blight. Rainstorms early this year caused $20 million worth of damage.
Now the city's best features are being soiled as ruptured sewer ducts pour tons of untreated sewage into the sea just off Ipanema beach. Repairs will take till December and the authorities have warned people to avoid beaches plagued by sewage pollution.
Much of Rio's troubles come from the past decades in which the city has turned from a political and cultural capital into a decaying resort.