The economic future of Rio de Janeiro enters a decisive moment this Wednesday (May 6). The Supreme Federal Court is expected to resume the trial regarding the redistribution of oil royalties — a dispute that could drain billions from the state's coffers and deepen a crisis already marked by political instability.
The concern is not isolated. State authorities, experts, and representatives from the productive sector have warned of the risk of a structural impact on the state's economy should the Court validate the change in the rules for distributing resources.
Even in the face of the political crisis that Rio de Janeiro is going through, the risk of significant losses has led different parties to unite in defense of the state, since government estimates indicate an impact of around R$ 9 billion per year.
In broader projections, the accumulated loss could reach R$ 50 billion by 2032, directly affecting the balance of public accounts.
Structural dependence
Today, oil royalties are one of the state's main sources of revenue, alongside the ICMS (a state sales tax). A significant portion of these resources is used to finance mandatory expenses, including the payment of retirement and pension benefits through Rioprevidência (the state's pension fund).
The argument presented to the Supreme Federal Court (STF) maintains that oil royalties should not be treated as conventional taxes, but as financial compensation for the economic and environmental impacts resulting from exploration activity.
In this understanding, these resources do not qualify as ordinary revenues subject to redistribution without considering the specific effects borne by the producing states.
Public services under pressure
The potential impact goes beyond government accounts. According to studies presented to the Legislative Assembly of Rio de Janeiro, essential areas such as health, education, and public safety could suffer significant cuts.
It is estimated that around R$ 1,3 billion per year would no longer be invested in these areas if the redistribution is confirmed.
Furthermore, the state pension fund could lose an average of R$ 4,6 billion per year, an amount equivalent to about two months of payroll for retirees and pensioners.
Significant fiscal imbalance
The president of the Federation of Industries of the State of Rio de Janeiro (Firjan), Luiz Césio Caetano, has also warned about the structural impacts of the possible redistribution of royalties: “The change in the rules for distributing royalties could generate a significant fiscal imbalance, with a direct impact on the state's ability to honor commitments and maintain essential public policies.”
He also highlighted the effects on the economic environment and emphasized the union between Firjan, Fecomércio, and the Rio de Janeiro Commercial Association (ACRJ) in a manifesto in favor of the state. "Rio de Janeiro has built a productive chain linked to oil over the years. Drastically reducing these revenues means affecting not only the public sector, but the entire economic dynamic that depends on these investments," he reinforced.
The president of Fecomércio RJ, Antonio Florencio de Queiroz Jr., warned of the effects on economic activity: "We are talking about a possible loss of up to R$ 20 billion in the state's GDP and a risk to more than 300 jobs, mainly in commerce and services," he stated during a public hearing at Alerj.
According to him, the reduction in public revenues tends to decrease investments and consumption, generating a ripple effect in the economy.
Municipalities under threat
Mayors of producing cities are also expressing concern. In many municipalities in the North Fluminense region, royalties represent the largest part of the budget.
The dependence of municipalities in Northern Rio de Janeiro State on oil royalties is structural—and, in some cases, extremely high. Academic studies and official data show that these revenues are not only supplementary but central to the functioning of the municipalities.
In cities like Campos dos Goytacazes and Macaé, for example, royalties once represented more than half of all municipal revenue. Surveys indicate that Campos had approximately 58% of its budget linked to royalties, while Macaé reached approximately... 53% dependence on these resources.
Other producing municipalities in the region also show strong exposure:
- Quissamã: approximately 51% of revenue linked to royalties.
- Carapebus: more than 50%
- São João da Barra: percentages exceeding 40% in certain periods.
These figures help to put the risk into perspective: any change in distribution could directly affect the finances of these cities.
The sheer volume of resources is impressive.
The amounts of money involved reinforce this dependence. The municipalities of Northern Rio de Janeiro State alone received approximately... R$ 3,09 billion in royalties in a single recent year., according to data from Firjan.
In the specific case of Campos dos GoytacazesThe municipality collected approximately R$ 863 million in royalties in one yearin addition to R$ 190 million in special participations.
Cities like Macaé and São João da Barra are among the main economic centers linked to oil, with revenues reaching hundreds of millions of reais per year, including taxes and government royalties.
Reducing these resources could compromise basic services, infrastructure projects, and social programs, widening regional inequalities.
Union in state policy
The debate takes place amidst a political crisis in the state, marked by uncertainty about the succession in the government after Cláudio Castro's departure. For political leaders, the combination of institutional instability and economic risk exacerbates the situation. But despite the disagreements and disputes between opposing sides and spectrums, the defense of the state prevails.
The president of the Rio de Janeiro State Legislative Assembly (Alerj), Douglas Ruas, has been leading efforts to block the redistribution and defend the state's interests before the Supreme Federal Court (STF).
"We are not just discussing numbers, but the future of Rio de Janeiro and the ability to maintain essential services for the population," he stated in meetings with authorities.
Meanwhile, Eduardo Paes, pre-candidate for governor of the state and former mayor of Rio, defended maintaining the current distribution: “The Supreme Court will decide on the distribution of oil royalties in Brazil. It is crucial for our state that the rule does not change. May 6th will be decisive for the future of Rio de Janeiro.”
Federal dispute
At the heart of the dispute is Law 12.734/2012, which provides for the redistribution of royalties between producing and non-producing states. States from other regions advocate for a broader division, while Rio de Janeiro maintains that the change violates the federal pact.
The case is being handled by Justice Cármen Lúcia and has already undergone attempts at conciliation between the federative entities, without reaching an agreement.
Experts believe the ruling will have an impact not only on Rio, but on the entire model of oil revenue distribution in Brazil.
According to economist Istvan Karoly Kasznar, Rio's dependence on royalties makes any change extremely sensitive: "The abrupt withdrawal or reduction of these revenues tends to worsen the state's fiscal imbalance, which already faces structural difficulties, compromising investments and essential public services."
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