Rio de Janeiro state in Brazil signs agreement to get federal aid

 The Rio de Janeiro state government of Brazil signed on Thursday an agreement with the federal government to receive financial aid to overcome a serious financial crisis.

Rio de Janeiro state declared state of fiscal calamity in mid-2016, and state workers have not received their salaries. State universities also suspended classes because they lacked infrastructure to operate.

Rio de Janeiro state's deficit is estimated at up to 26 billion reals (8.2 billion U.S. dollars) in 2017.

With the agreement, the Rio government will take two loans of 6.5 billion reals (2 billion dollars).

In exchange for that, the state will have to fulfill several conditions related to expenses cuts amounting to 9 billion reals (2.8 billion dollars) and measures to increase the tax collection by 1.2 billion reals (377 million dollars).

The deal is valid for three years and can be renewed if it proves necessary. During that time, the state will not have to pay its debts to the Union.

Finance Minister Henrique Meirelles said other states will be able to request federal help as well, if they fulfill the requirements.

The agreement which was signed in Brasilia by President Michel Temer and Rio de Janeiro Governor Luiz Fernando Pezao, needs to be validated by Congress and the Rio state assembly to take effect.

source: Xinhua