Nearly 19 million people, roughly one in ten Brazilians, have already gotten some debt relief under the two editions of Desenrola Brasil, the federal renegotiation program that has since ended. The Finance Ministry is now preparing a new model, this time to buy back old debts that creditors have all but given up on collecting, according to InfoMoney on Thursday (17), based on an interview Finance Minister Dario Durigan gave to the newspaper EXTRA. The proposal will go to President Luiz Inacio Lula da Silva "in the coming days".
The difference from Desenrola is that borrowers would not have to accept yet another renegotiation. The idea is to run an auction and buy, at a steep discount, debts contracted mostly between 2020 and 2022, the covid pandemic years. Durigan said the targets are obligations that "the banks themselves, the companies themselves have already lost hope of collecting", which keep millions of Brazilians listed as defaulters, a status that blocks access to new loans.
In plain terms: a discount of this kind, called desagio in Brazil, is what makes a debt trade hands for far less than its face value, like a 1,000-real credit card bill from the pandemic era changing owners for a fraction of that. The older and less likely a debt is to be collected, the cheaper it becomes on the market. The ministry wants to use that mechanism to clear defaulters' records without a heavy bill for public finances.
Durigan compared the initiatives to vaccines against a "chronic" debt problem inherited from the pandemic, and said vaccinating that problem "has to keep happening". He also confirmed the political timing: "We are presenting (the proposal) for the president to take to the campaign", he said, in a presidential election year with the vote scheduled for October.
"The next vaccines will be broader vaccines and will work along the lines of buying back the oldest debts people have. That is what we are taking to president Lula: a new program in which we can, with a large discount, buy back people's debt without them having to go through new renegotiations."
What is still undefined
Who would buy these debts and what discount would apply remain open questions, and the model is still being drafted, according to the minister. Officials are also studying whether to include non-bank debts, such as electricity and gas bills. O Globo and Brasil 247 also reported the plan, and Durigan cited the case of drivers who are shut out of Move Brasil, the federal program that finances vehicles at lower rates, because of old defaults.
The study lands one day after Brazil's central bank cut its benchmark interest rate by 0.25 point, to 13.75% a year. At that rate, every 1,000 reais financed costs about 137.50 reais a year in interest alone, before fees and taxes. For the economic team, still-high rates combined with old debts explain why so many people remain blacklisted even after two renegotiation programs.