Brazil

Rio de Janeiro said it’s running out of money to pay for basic services months before the Olympic Games while other Brazilian states warned of similar financial crises if the federal government doesn’t provide debt relief, Bloomberg News reported. Six state governors and a representative for Rio de Janeiro said on Tuesday their fiscal woes are forcing them to make cutbacks that could lead to a breakdown of social services. Rio has been delaying payment of salaries to public servants since the beginning of the year.

A political crisis and a two-year corruption scandal have brought Latin America’s largest economy to its knees. Now the country is looking to the lower house to end the political stalemate. There legislators prepare to vote on Sunday whether to move ahead with an impeachment of President Dilma Rousseff that could end with Vice President Michel Temer taking the reins, Bloomberg News reported. The government is appealing in the Supreme Court to halt the vote.

For the past two months, Brazilian financial markets have staged wild rallies over any sign that left-leaning President Dilma Rousseff might be ousted from office, even as the nation’s economy spiraled further into the depths of its worst crisis in generations, The Wall Street Journal reported. Now, with a crucial impeachment vote looming on Sunday, investors may soon get their wish for new leadership. If two-thirds of lawmakers in Brazil’s lower house vote to try Ms. Rousseff on charges of doctoring the government’s fiscal numbers, she will have to step aside, at least temporarily.

Bankruptcy protection requests in Brazil more than doubled in the first quarter from the year-earlier period, as businesses suffered from the highest borrowing costs in a decade and a steep recession dragged down revenue, credit research company Serasa Experian said on Wednesday. Companies filed 409 requests for court protection from creditors last quarter, the highest number since the country enacted a bankruptcy law in 2005, Serasa said in a report. In the first quarter of last year, 191 companies sought bankruptcy protection, Serasa said.

State-controlled Petróleo Brasileiro SA unsuccesfully sought the appointment of arbiters to rework a long-term contract with debt-laden drilling rig leaser Sete Brasil Participações SA, according to three sources with knowledge of the situation, Reuters reported. The proposal, made in recent weeks, called on each party to name three mediators to rework the contract, said the sources, who requested anonymity since the plan is private. The contract between Petrobras and Sete Brasil has been in dispute for two years.

Brazilian airline Gol Linhas Aereas Inteligentes SA said Monday it has hired U.S.-based PJT Partners Inc. as a financial adviser, as the country’s deep economic recession is hurting demand for air travel, The Wall Street Journal reported. Gol said in a statement it hired “PJT Partners to advise the company in connection with measures to strengthen its capital structure and liquidity and to improve the profile of its debt.” In February, Moody’s Investors Service downgraded its rating on Gol because the airline faces a cash crunch in coming months as debt payments come due.

Brazil’s economic crisis is as bad as its political one, The Wall Street Journal reported. Latin America’s biggest economy appears headed for one of its worst recessions ever. It stalled in 2014, shrank 3.8% last year and now faces a similar contraction this year. Unemployment rose to 9.5% on Thursday as wages fell 2.4%, both trends forecast to worsen. One in five young Brazilians is out of work, and Goldman Sachs says Brazil may be facing a depression. The deteriorating outlook forms a dire backdrop for Brazil’s political straits.

Brazil’s economic quagmire, with an ever-growing corruption scandal on top of the longest and deepest recession in at least a century, is producing an unprecedented era of corporate debt restructuring in the country, Bloomberg News reported. The borrowing binge Brazilian companies went on during the country’s economic boom earlier this decade has now turned into an albatross as tens of thousands of protesters take to the streets and lawmakers move toward impeachment proceedings against President Dilma Rousseff.

A Brazilian judge on Tuesday sentenced Marcelo Odebrecht, the former chief executive officer of South America’s biggest construction company, to 19 years in prison for his involvement in a sprawling corruption scandal centered on Brazil’s state oil company, Petrobras, The Wall Street Journal reported. The scion of a billionaire family, 47-year-old Mr. Odebrecht was convicted of money laundering, corruption and organized crime. He was CEO of Odebrecht SA when he was arrested and jailed last June. He later resigned from the company founded by his grandfather.

Brazil’s economy suffered its biggest contraction in 2½ decades last year as the country’s recession stretched through the fourth quarter with little sign of abating, The Wall Street Journal reported. Gross domestic product shrank 3.8% in 2015, Brazilian Institute of Geography and Statistics, or IBGE, said Thursday. That was the biggest drop since 1990, when the economy contracted 4.3%. But in contrast to that downturn, which was preceded and followed by at least modest expansions, few economists predict a recovery soon for Latin America’s biggest economy.