Nunca antes neste País… o brasileiro afogou tanto em dívidas

For the first time in Brazil's history, citizens are drowning in debt, with income currently consumed by loans amounting to R$ 3 out of every R$ 10 available. This debt burden was a key promise made by former candidate Lula during the 2022 election campaign, but four years after his inauguration, the situation has worsened. Recent data from the Central Bank reveals that in July, the income of Brazilian families committed to debt payments reached 28.9%, the highest level since records began in March 2011.

Non-payment rates for individuals have also hit a new record at 5.8%, and 7.8% for credit without interest. While the deadline for the Desenrola 2.0 program, which ran from July 2023 to May 2024, was August 31, the latest figures from the Central Bank do not yet reflect the impact of this month. Despite the temporary relief provided by the first Desenrola, current non-payment rates are at historic highs across all lines of credit for individuals.

The convenience of private consignments, a more recent personal financing alternative with lower interest rates, has surged in recent months, but so have defaults on these loans, which now account for 10% of total payments, nearly four times the non-payment rate for state employees. Credit card non-payment has also reached a new historical peak at 65.8%.

While fintechs have encouraged banking and credit issuance, they have also contributed to the increase in credit card users. Out of Brazil's 96 million cardholders, nearly 53% have overdue bills and rely on revolving credit, which carries interest rates of 15% per month. This issue is now concerning the President of the Central Bank, Gabriel Galípolo, who has indicated the possibility of instituting stricter rules.

The Central Bank warns that the issuance of credit must be curbed, suggesting stricter capital and reserve requirements, as well as an increase in late payment fees. However, the government continues to advocate for more relaxed conditions. For instance, it recently extended the financing term for the Move Brasil program from 72 to 84 months, while maintaining a six-month waiting period for new applicants.

Vehicle prices have also increased, with new cars now ranging from R$ 150,000 to R$ 200,000. Economist Alberto Ramos of Goldman Sachs predicts a deterioration in credit indicators in the coming months, citing the high Selic rate, slower GDP growth, and weakened labor market. Meanwhile, he notes that government-directed credit, including public institutions and programs, continues to outpace private credit.

Overall, the expansion of credit, encompassing both individuals and businesses, has grown by 8% in real terms in July compared to the same month last year. This growth is primarily driven by government-funded financing, particularly in the housing and rural credit sectors. While private credit has slowed, it now accounts for 41.7% of total available credit in the economy, far outpacing private institutions.