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Rio de Janeiro Olympic Games: mixed blessing in badly-run country

At a time when the Olympic Games in Brazil are in the offing, the country appears to be not ready since its economy and political situation are disastrous. All over the country, the public health system does not work owing to a shortfall in the relevant budget sector allocations. The removal of President Dilma Roussef and the constitution of a new government can be a solution but every measure must be taken quickly since the pressure on the population is stronger than ever.

Things are getting uglier here every day. I advise everyone with plans to visit Brazil for the Olympics in Rio to stay home. You’ll be putting your life at risk here. This is without even speaking about the state of public hospitals and all the Brazilian political mess. Only God can change the situation in our Brazil”, says Rivaldo, a former Brazilian footballer, on his Instagram account.

Unquestionably, he is right. Each day in Brazil is more dramatic than the one before, and the news is uniformly grim. There is a political crisis, an economic crisis and, shouldn’t that be enough, a public health crisis as well.

Every day the world’s major newspapers write a flood of words about the political crisis affecting the country, but the economy is in a turmoil too. Between 2011 and 2014 Brazil’s economy grew on average by 2.2% a year. Abruptly, last year, the GDP collapsed by 3.8%, and is expected to shrink 3.6% again in 2016. Several data may explain the situation. Dating back to 2003, last year was the first one registering a drop in household consumption. At the same time, public spending has surged and the budget deficit increased to 10.4% of GDP in 2015, with an overall budget deficit rising to 613 billion Real and the closely monitored primary budget balance jumping to 111.249 billion Real. In this economic earthquake, the government has loosened the fiscal policy and the Central bank has reduced its benchmark interest rate in 2011-2012 pushing up the inflation above the bank’s self-imposed upper limit of 6.5%, and way above its 4.5% target.

Furthermore, the labour market has jammed. In fact, real wages have been dropping since March 2015 and the unemployment rate in the main metropolitan areas increased to 8.2% in February 2016 (and is expected to raise even more by the end of the year). Moreover, in a desperate attempt to improve public finance, the government has cut spending on unemployment insurance and increased taxes.

Though an upfront investment policy could improve the situation, Brazil has unfortunately no money to boost investments at the moment. From bad to worse, Petrobras, the state controlled oil giant and Brazil’s biggest investor, is in the midst of a corruption scandal that has paralyzed spending: relevantly, it has been estimated that the forgone investment likely reduced GDP growth last year by one percentage point.

If the overall economy works badly, the medical industry does not perform better. In fact, the industrial production of equipment and materials for medical and dentistry application, as well as optical supplies, decreased by 14.9% in December 2015 as compared to the previous year, and the number of workers employed in the sector decreased by 2.2% from January to December 2015.

Moreover, the overall public health system is on verge of collapse. In this regard, the end of 2015 was quite shocking as the public health system of the Rio’s state government broke down after the authorities confirmed a budget shortfall. The situation was dramatic with hospitals lacking even saline or other basic medical stuff. As a response, patients were sent to emergency care units instead of hospitals and the state government published daily bulletins to confirm which hospitals were working.

Last year, on the 23th of December, the governor of Rio de Janeiro State declared a state of emergency. Few days later, 389 million reals (US$ 96 millions) were granted by the federal government. Actually, this was a drop in the ocean owing to the tune of 1.4 billion real (US$347 million) arrears in payments to suppliers and subcontractors, according to the authorities.

But things can unexpectedly get even worse. Since the end of January, Brazil has been facing a Zika virus large-scale epidemic. As such, the already overloaded local health facilities now have to deal with a new influx of patients: some 1,500 cases of infection by the mosquito-transmitted virus have been recorded in the region since the beginning of the year.

And all of this just occurs now that the Olympic Games are about to officially begin.

Many reasons can be listed to explain what is going on in the Brazilian health sector. Relevantly, concepts such as misused resources, poor management and corruption are emblematic of the issue.

The government explains the crisis blaming the fall in the oil price and the impact on the state’s budget of the Petrobras chaos.

Adding to these, other prominent reasons do emerge, with the corruption of public authorities likely ranking first. As reported by a local newspaper, at the beginning of March 1000 tons of out of date medicines purchased by the state health ministry are doomed to burning at a cost of almost 3 million reals. According to Deputy Pedro Fernandes, the chairman of the Budget Committee audit and control, this would represent an absurd waste of still usable medicines and supplies. Inherently, in spite of the opening of a public audience and a parliamentary inquiry, the ghost of corruption is in the air since some industries could take advantage of drug burning.

Public money is also regularly misappropriated. The most recent example was in February, when a court case revealed a network producing false medical bills with proceeds going to local politicians in São Gonçalo, the state’s second biggest city after Rio.

What’s more, evidence has emerged that the Rio government has denied money for hospitals in order to save up for the Olympic Games.

If the health sector is suffering from corruption and poor management, the legislation does not work better. Relevantly, amendment 86/2015 altered the financing model proposed by amendment 29/2000 and made congressional amendments binding when computing health expenses. At first glance, amendment 86/2015 looks like it would increase health sector financing, but in nominal terms the amounts earmarked for the ministry of health in 2016 may actually mean a smaller share than in 2015.

In the end, it seems that Rivaldo was right. The situation is dramatic and could even get worse. The spectre of Rio 2016 Olympic Games is looming and the government is running against time in a race that will see it as the winner at the expense of people’s welfare. According to the Brazilian ministry of health, funding for the health sector will not be sufficient in 2016. This echoes fear that the resources allocated to health will be exhausted by September 2016.

That’s what Brazilians are facing in these days in Rio de Janeiro and all over the country. Can Dilma Roussef removal be the solution? Or is it just smoke in the eyes hiding the whole iceberg?

Someone might be afraid to answer this question.

Pietro Dionisio