Engulfed by political and economic crises, Brazil can ill-afford to be beset by more problems.
Yet that’s exactly what is happening after its southernmost state of Rio Grande do Sul defaulted on a 280 million real ($80.9 million) payment to the federal government this month — the first since the nation’s municipal-debt meltdown in 1997. The state, proportionally the most-indebted in Brazil, is in such distress that it didn’t pay salaries to public workers in July.
Local governments in Latin America’s biggest country are coming under increasing financial stress as the economy heads for its longest recession since 1931 and caps imposed as part of a federal rescue 18 years ago constrain their ability to obtain financing. Their woes are threatening to make matters worse in a country reeling from an expanding corruption investigation and growing calls to impeach President Dilma Rousseff.
Brazil Energy Insight 
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