Brazil’s Rio Grande do Sul on Tuesday became the second state to declare a “fiscal calamity” because of lagging revenues and soaring state government costs. Rio de Janeiro declared a “fiscal calamity” earlier this year. Such a decree gives the state’s governor wide powers to control spending and hike taxes while seeking increased federal government assistance. Rio Grande do Sul Governor Ivo Sartori said the decree was needed because of a sharp downturn in economic activity, employment and tax revenues in his state. He suspended creation of new state government jobs, hiked retirement contributions by state employees and limited all government spending to essential services. He is expected to appeal to President Michel Temer for financial assistance later this week. Similar measures were taken in Rio de Janeiro earlier this year. Other cash-strapped Brazilian states could follow in the weeks ahead, according to press reports.
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