“I only live to repay my debts!” “, sighs Johnny de Souza Brandao, as he sets up the stand where he sells souvenirs to tourists strolling along Copacabana beach in Rio de Janeiro. A 37-year-old father, he has three jobs and works 16 hours a day to repay the purchase of a microwave for 200 reais (36 euros) on credit.
After losing his job, this construction worker was unable to repay the amount borrowed, which he had spread over several months. Very quickly, the interest rate caused his debt to rise to 4,000 reais (730 euros), like a “ a snowball “explains this informal worker, now deprived of a credit card by his bank. “ I have to ask a friend to do my shopping for me and I pay him back little by little »he regrets.
Like Johnny de Souza Brandao, 40% of the Brazilian population is unable to pay their debts, according to data from the Credit Protection Service (SPC). In Brazil, the low income of a large proportion of citizens does not allow them to meet their needs, forcing them to resort to credit – access to which was facilitated under the first mandates of Luiz Inacio Lula da Silva (from 2003 to 2006, then from 2007 to 2010) – even for essential purchases.
“The procedure is too bureaucratic”
Since the Covid-19 pandemic, this situation has become critical: the increase in unemployment has strained purchasing power, causing the number of indebted families to rise from 63.6% in 2019 to 76.6% in 2023, d ‘after the National Confederation of Commerce. At the same time, the central bank raised the key rate, now set at 10.75%, to curb inflation. The interest rate charged for revolving credits then exploded, reaching an average annual rate of 440.8% in 2023. “ It’s impossible to repay! », indignant Johnny de Souza Brandao.
Fearing that over-indebtedness would cause a slowdown in consumption, President Lula launched the “Desenrola” (“unwind”) program in July 2023, in partnership with 600 companies, including the country’s main banks. This aims to renegotiate the unpaid debts of more than 70 million people which occurred between 2019 and 2022. “ We will save at least 72% of the indebted population and allow them to return to the consumer market », promised the former metalworker on July 18, 2023, during his weekly show broadcast on YouTube.
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