Brazil debt crisis swells with over 82 million people behind on payments
Brazilian credit bureau Serasa Experian reports that more than 82 million adults are behind on personal debt payments. High interest rates, slowing job growth and food inflation are squeezing household budgets.
Serasa Experian chief economist Camila Abdelmalack said the delinquency rate is approaching half of the adult population and stands at its highest level in 14 months. Around 28% of debts are bank loans, 21% are utility bills and the remainder consumer credit.
The Brazilian central bank's decision to keep the benchmark Selic rate at 14.75% has pushed mortgage and consumer credit rates into the 35% annual range. A slide in agricultural export prices and slowing services-sector hiring have contributed to a real decline in disposable household income.
Finance Minister Fernando Haddad announced that the second phase of the Desenrola Brasil debt restructuring programme, focused on credit-card debt, will launch in July. Alberto Ramos at Goldman Sachs said the programme could bring short-term relief to roughly 4.2 million households, but cautioned that the structural interest burden ultimately depends on a recovery in investment growth.
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