Rio to cut Olympic costs by 10%

GMT 07:41 2015 Wednesday ,07 October

Arab Today, arab today Rio to cut Olympic costs by 10%

Labourers work at construction site
Rio de Janeiro - AFP

Organizers of next year's Rio Olympics said Tuesday they aim to slash some 10 percent from spending to keep within budget while Brazil plunges into economic crisis.

South America's first country to host the Olympics is in serious trouble, with inflation and unemployment soaring and the IMF becoming the latest to predict a steep two-year economic downturn.

Organizers are currently meeting to identify possible savings within their operating budget of 7.4 billion reais ($1.9 billion). And they say the Rio Games will be recession-proof -- but still a great show.

"It's not about being modest. It's about being efficient, it's about making sense," Mario Andrada, chief spokesman for the Rio 2016 Olympic and Paralympic Committee, told AFP.

"The message is clear: a message of efficiency, rather than a message of humility."

Officials say that in some cases, 30 percent will be cut from current costs, but Andrada said "generally it's about 10 percent as an overall figure."

These cost savings can range from simply eradicating printers and printed material to downsizing big ticket items that threaten to turn into money pits.

An option of adding a second floor and other infrastructure to the Maracana football stadium for an extravagant opening show has already been discarded, an official said.

Hospitality rooms and facilities for officials and relatives of Olympic participants will be cheaper temporary structures like tents rather than permanent buildings, unless there is a clear use for them after the Games.

"When something goes a little overboard, you have to find savings," Andrada said.

He insisted that budgeting is under control and that despite the country's descent into economic -- and increasingly political turmoil -- Olympics organizers are not panicking.

"We have a balanced budget," he said. "We are serious. We plan to be efficient."

- Respect, not waste -

But Andrada conceded that scrutiny of the mega event, which kicks off in August, is growing.

Huge street protests took place in 2013 amid anger over spending ahead of the 2014 World Cup tournament in Brazil.

"You know how tough it is with the political crisis," Andrada said.

"If people feel that we are treating money with respect and doing our best to save where savings can be found, it will release this tension about how can you spend so much money in a country that is in crisis."

The more than 30 percent devaluation this year of the national currency, the real, means that not all of Brazil's crisis is bad for Olympic preparations,

A large part of funding comes in foreign currency, either from ticket sales or the International Olympic Committee, and that money has risen correspondingly in purchasing power.

There have been fears that private sponsors and contractors crucial to paying for the Games would be derailed by the economic slowdown, but Rio 2016 officials say that nearly all contracts have been fulfilled, allowing preparations to keep to schedule.

Partly that's because the percentage of companies meeting their commitments with goods rather than cash has reached about 60 percent, higher than during the 2012 London Games.

Andrada noted that a steel producer, for example, paid with steel via construction companies working in the Olympic Park.

The total budget for the Olympics, including the sprawling construction projects at the Olympic Park and improvements to Rio's patchy public transport system, comes to just over 38 billion reais (almost $10 billion).

Now Olympic organizers not only hope to escape the ravages of Brazil's recession, but to show the world's seventh biggest economy how to do things.

The tight budgeting, focused on private sponsors, is "a different way to do things in Brazil," Andrada said.

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