Rio Olympics budget shrinking amid turmoil in Brazil

The president is facing impeachment proceedings. The economy is in free fall. The country is reeling from a wide-ranging corruption scandal.

Such is the grim backdrop in Brazil as organizers of next year's Olympics in Rio de Janeiro prepare to make their latest progress report to the International Olympic committee in Lausanne, Switzerland.

With eight months until the opening ceremony, the final stretch of Olympic preparations is taking place amid political and financial turmoil in Brazil.

The nation's worst recession since the 1930s is already having an impact on the Games: The organizing committee budget is being slashed and leading to cuts in services, including discussions about whether the athletes will have free air conditioning in their rooms.

Rio organizers are travelling to Lausanne for this week's three-day meeting of the IOC executive board, which starts Tuesday.

While concerns over construction delays in Rio have eased over the past year, organizing committee chief Carlos Nuzman will be under pressure to reassure the IOC that the economic and political crises won't derail planning for South America's first Olympics, which open on Aug. 5, 2016.

Unemployment near 8 per cent

When Rio was awarded the Summer Games seven years ago, Brazil was riding high as an emerging giant with a booming economy. Now, Latin America's largest economy is sinking, the real has lost a third of its value this year, gross domestic product has tumbled, inflation is nearing 10 per cent and unemployment has soared to nearly eight per cent.

The downturn comes with Brazil mired in a massive kickback scandal centred on Petrobras, the giant state-run oil company.

Meanwhile, impeachment proceedings were launched last week against President Dilma Rousseff, whose approval ratings have sunk to around 10 per cent. The process was initiated by a political rival, based on accusations Rousseff's government broke fiscal responsibility laws by using money from state-run banks to fill budget gaps and pay for government social spending.

We are discussing with our partners, especially the IOC, what kind of levels of service we can reduce. As long as we don't compromise the Games, the quality of competitions ... then we have to look for efficiencies.- Rio Olympics spokesman Mario Andrada

Rousseff sharply disputes the accusations, and most analysts at this point think she will survive the test.

The Olympics have not escaped the economic slump.

Rio organizers are trying to cut two billion reals ($530 million US), or almost 30 per cent, from their operating budget of 7.4 billion reals ($1.9 billion). Rio officials say most of the cuts involve "behind-the-scenes" facilities.

"We are discussing with our partners, especially the IOC, what kind of levels of service we can reduce," spokesman Mario Andrada said last week. "As long as we don't compromise the Games, the quality of the competitions, the experience of the public, then we have to look for efficiencies."

At one point last week, organizers said athletes would have to pay for air conditioning in the Olympic Village because of the cuts. A few days later, however, organizers said they would provide free air conditioning after all.

Separately, organizers have not yet signed a contract with a private energy company to supply electricity for the games, meaning that power may come only from temporary generators.

Concerns also remain over the severe water pollution in Rio that affects the sailing, rowing and canoeing venues. A new round of testing by The Associated Press found the waterways being used for the Olympics are more widely contaminated by sewage than previously known and pose a greater threat to the health of athletes.