Lula plans broad consumer debt renegotiation in Brazil, adviser says

BRASILIA, Oct 13 (Reuters) – Brazilian presidential candidate Luiz Inacio Lula da Silva has proposed a sweeping consumer debt renegotiation program backed by government guarantees, aimed at providing relief to low-income families if he wins the second round elections on October 30, said a senior adviser. said.

Economist Guilherme Mello, who advises Lula’s Workers’ Party, told Reuters the government would partially guarantee renegotiations of up to 95 billion reais ($18.2 billion) of non-bank debts such as bills. electricity, water, retail and telephone, for consumers earning up to 3,600 reais ($677) per month.

The first stage of the proposed program, called “Desenrola Brasil”, would be to create credit bureaus centralizing data on these consumer debts in order to coordinate remittances from creditors. The renegotiated debts would be partially covered by a government guarantee fund of 7 to 16 billion reais, Mello said.

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“These are very reasonable amounts for the government,” he added. “You can have a design based on the tax credits that the banks have, you have several options to design this fund.”

The details of the plan, outlined broadly in Lula’s left-wing presidential platform, come after right-wing incumbent Jair Bolsonaro announced a program to renegotiate the debt of some 4 million state bank Caixa customers. Economica Federal.

Nearly 70 million Brazilians have been blacklisted by credit reporting agencies after the pandemic and soaring inflation have strained family budgets, weighing on an economic rebound.

Mello, who heads the team writing economic proposals for Lula at the left-leaning think tank Perseu Abramo, said the government would set a minimum discount for renegotiating debts in the program and give priority to creditors offering more. relief. He said preliminary calculations for the guarantee fund assumed a 25% default rate and a 30-70% debt forgiveness.

Advisers are designing the program with an initial focus on non-bank debt, as it accounts for 72% of total household liabilities, he said. But they are also exploring strategies to encourage the restructuring of bank debt at lower interest rates by reducing required deposits from lenders.

($1 = 5.3189 reais)

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Reporting by Marcela Ayres Editing by Brad Haynes and Diane Craft

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