4.9%. That is the share of all credit in Brazil's financial system that was past due in July, according to figures released this Friday (28) by the Central Bank. It is the highest level since March 2011, when the revised data series began. In practical terms, for every R$ 100 Brazilian banks have lent out, nearly R$ 5 has not come back on time.
The rate climbed from 4.6% in June, a 0.3 percentage point rise in a single month. Over 12 months, the increase reaches 0.9 point, according to CNN Brasil. The record came despite the Novo Desenrola Brasil, the federal government's debt renegotiation program launched in May.
How the indicator works
The Central Bank counts as in default any credit operation overdue by more than 90 days, for both individuals and companies. From the banks' perspective, that is debt that has already slipped past the payment calendar and is edging toward a loss.
For individuals, the picture is tighter still: default rose from 5.4% in June to 5.8% in July, also a series record. Among companies, the rate went from 3.2% to 3.3%, the highest since October 2017, when it hit 3.4%, according to G1.
The figure draws attention because it follows a government push to clear borrowers' names. According to the Finance Ministry, Desenrola 2.0, a program that lets indebted consumers renegotiate what they owe at a discount, had already restructured more than R$ 22 billion in roughly 3.6 million agreements by the end of June. This week, Finance Minister Dario Durigan announced that enrollment in the program was extended to August 31.
Half of annual income already spoken for
Household indebtedness remains high. In June, the latest month available, family debts totaled 49.8% of everything households earn in a year, stable versus the previous month. Put differently, nearly half of the average Brazilian's annual income is already committed before the paycheck even lands.
A survey by credit bureau Serasa Experian shows the scale of the problem: in March, 82.8 million Brazilians were in debt, equivalent to 49% of the population. Those debts added up to R$ 557.7 billion, and 47% of the total sat with financial institutions, precisely the target of Desenrola 2.0.