Rio de Janeiro seeks fiscal shielding: Ending the use of extraordinary revenues for current expenses

The proposal for a Fiscal Responsibility Law (LRF) specific to the State of Rio de Janeiro marks a late but necessary attempt to fix a history of public management dependent on volatile revenues. By categorically prohibiting the use of extraordinary resources, such as atypical state-owned dividends or sharp fluctuations in oil royalties, for recurring expenses, the state seeks to halt a model that frequently collapses when the commodity cycle cools. This measure acknowledges that sustainability cannot be hostage to isolated events, especially in a scenario where the 12-month accumulated IPCA stands at 4.44%, pressuring purchasing power and demanding greater rigor in public resource allocation. With the commercial dollar trading near R$ 5.15, showing a downward trend of 0.67% over the last 7 days and 0.22% in 30 days, the state faces the urgent need to transition toward a liquidity reserve model to avoid systemic insolvency risks.