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SBD Global/November 9, 2012/Finance

Rio De Janeiro Governor Warns World Cup, Olympics In Jeopardy If President Signs Off On Oil Bill

A new bill passed by the Brazilian Congress, which would share out oil revenues amongst the country's 27 states, "could compromise" the state of Rio de Janeiro's ability to host the mega sporting events coming up in the next few years, according to Viana, Sorosini & Barros of GLOBO. The bill still needs President Dilma Rousseff's signature before it can be made into law. Rio de Janeiro state Governor Sergio Cabral was quick to criticize congress' decision. Cabral said, "A law project like this would create a collapse in the public finances of the state. It's absolutely not viable. We are going to close our doors, we won't do the Olympics, we won't do the World Cup." State projections indicate Rio would lose R$116.7B ($57B) through '30 if Dilma signs the bill. Cabral said that he was confident the president would veto it. Cabral said, "I am absolutely calm about the fact that the president will veto it. She already announced it publicly. The law project is unconstitutional" (GLOBO, 11/8). BLOOMBERG's Rabello & Colitt reported that the royalties bill has been stalled since '09 because oil-producing states, especially Rio and Espirito Santo, have "resisted demands from other states for a bigger share of the bonanza." Consulting company Perspectiva Political analyst Andre Pereira said that the president will "face pressure from all sides." Pereira said, "She’s between a rock and a hard place, having to choose between upsetting a few close allies and a lot of non-producing states. This battle won’t be over soon" (BLOOMBERG, 11/7).
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