Saturday, June 18, 2016

No game this... Brazil may go bankrupt


As much as I love watching the Olympics (the grand opening ceremonies, marathons, discussing the day's sports with the closer ones, savouring the host country's scenic beauty that the TV cameras show), the cost factor has always been there in the back of my mind. I've always wondered how much it would take for the host country to spend and bost infrastructure as soon as they become the chosen one to host the games? But a news report that I read today just made me cringe at the risky financial details involved.

With Rio declaring a 'public calamity' over a major budget crisis ahead of the Olympics, it seems more turmoil is in store for Brazil, the South American country we all remember for its colour, splendor and carnivals.
Rio state authorities have declared a 'state of public calamity' to release emergency funds to finance the Olympic Games that are to begin in August.
The August Olympics and September Paralympics in Rio de Janeiro will be the first to be held in South America.
But hosting the game has always proved to be a risky financial proposition. Traditionally, when a country successfully bids for the Olympics, it is expected to make huge investments in improving infrastructure such as building massive hotels, expand its road/rail/air connectivity, build arenas/stadia to host the games. All these might put a burden on the country's Budgetary reserves.
But on the positive side, hosting the game may boost tourism boom by showcasing the country to the entire world. Will Brazil pull this off without going bankrupt in the process?
Back in 2010, when Rio succesfully bid for the Olympics, everything about Brazil was sparkling: it had a stable economy and political condition, a stable currency, peaceful democratic goivernment, vast oil was discovered off Rio's coasts... So much positives were there. But in the recent years, Brazil's economy is in doldrums - the country is mired in a recession that is worst in 2 decades (25 years to be precise), its GDP has been shrinking every year and it has just an "above junk" rating, fall in global oil prices, delayed paychecks for government servants, population taking to streets to impeach the Prez, corruption in real estate, a rising unemployment rate.. And, what not?
Amnesty International has expressed concern at the cuts to social services, which could affect the training of security agents to work in crime-ridden slums. The decision to cut services and security ahead of the Olympic Games may lead to a collapse in public safety, health and environmental standards.

Rio’s state budget shows a $5.6 billion shortfall for 2016. Royalties from oil, the main revenue-earner, are projected to collapse from $3.5 billion in 2014 to $1 billion this year.
After much pleading, Rio received nearly $300 million from the federal coffers to extend its metro network. That  the federal budget itself is in no better shape is another matter of concern. Brazil's fiscal deficit is pegged at around $47 billion. And yes, they have double- digit inflation and a record 11% unemployment.

Being a believer, i can only hope Christ the Redeemer will save the nation from breaking the bank.....

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