The Senate floor approved on Monday a federal government program to help families renegotiate their debts. As it often happens with consensual matters, senators did not hold a roll call vote.
A campaign promise by President Luiz Inácio Lula da Silva, the Desenrola program was enacted by way of a provisional decree early in June, and was set to expire if not approved by Congress by Tuesday. The House approved the debt-renegotiation plan in early September, and it can now be signed into law by President Luiz Inácio Lula da Silva. The approval by Congress will allow the program to continue in operation.
Senator Jaques Wagner, the government’s chief Senate whip, told the Senate floor that the opposition has set “an irrational logic” in the vote of provisional decrees, creating a “constraint” for senators to vote them at the last minute after being approved in the House, with little time for analysis or modification.
“The provisional decree expires tomorrow [October 3]; without today’s session, what has been done would be lost,” Mr. Wagner complained.
As a condition to join the program, banks must remove customers whose debt amounts to up to BRL 100 (USD 19) from their list of debtors. The debts are not forgiven, but these customers get a “clean slate” to obtain more credit. The Finance Ministry estimates that there are about 1.5 million people in this situation in Brazil and that overall the program can benefit up to 32 million Brazilians, including the larger debtors.
Consumer demand for credit fell 10.9 percent in July compared to a year ago. The results continue a negative trend that began in May 2022 — sparked by high interest rates and rising default rates. Data from credit protection agency Serasa Experian shows that nearly 44 percent of Brazilian adults are in default.
Congressman Alencar Santana incorporated the Desenrola program in his report to a separate bill setting restrictions on credit card interest rates, effectively placing both initiatives in the same package.
Last week, Finance Minister Fernando Haddad announced that Brazilians have renegotiated BRL 126 billion (USD 25 billion) in debts through Desenrola.
The Lula administration’s economic agenda is obsessed with credit. The government has publicly pressured the Central Bank to lower interest rates on several occasions. Chief of Staff Rui Costa even said in April that Brazil could increase its investment in sanitation if interest rates were lower.
By helping low-income families out of debt, the Lula administration hopes to jolt consumption and keep the economy performing well.
The post Lula’s debt renegotiation program clears Congress appeared first on The Brazilian Report.
