RIO DE JANEIRO, Brazil (AFP) — Rio state authorities declared a “state of public calamity” Friday over a major budget crisis, in order to release emergency funds to finance the Olympic Games due to begin in August.

The decree authorises the state to “adopt all necessary emergency measures to ration essential public services in order for the Rio 2016 Olympic Games and Paralympic Games to take place.”

“Any institutional instability would hurt the country’s image,” said the decree, signed by acting governor Francisco Dornelles.

The August 5-21 Olympics and September 7-18 Paralympics in Rio de Janeiro are the first to be held in South America.

The events pose “serious difficulties in delivering essential public services and could even cause a collapse in public safety, health, education, transportation and environmental management,” the decree said.

Rio de Janeiro state is in financial straits due to the fall in global oil prices, while Brazil overall is floundering through a deep recession.

Police and other government workers in Rio state have seen paychecks delayed because of the cash crunch. Retirees have protested because of unpaid pensions.

Brazil’s economy shrank 3.8 per cent last year, its worst recession in 25 years. The International Monetary Fund and the market are predicting a similar contraction this year.