Lula’s debt-relief program serves 7 million Brazilian consumers

As a guest at President Luiz Inácio Lula da Silva’s weekly live broadcast, Finance Minister Fernando Haddad said on Tuesday that over 7 million Brazilians have renegotiated debts through Desenrola, a federal program launched in July this year that allows people to clean their credit scores.

The government enacted the program through a provisional decree — and later incorporated it into a bill that aimed to impose limits on credit card interest rates and that cleared Congress in early October. 

By helping low-income families get out of debt, the government hopes to jolt the economy — family consumption is a key economic driver on the demand side, typically accounting for more than 60 percent of Brazil’s gross domestic product. 

Several sectors of the economy — such as durable goods producers — are sensitive to fluctuations in the credit market, which has been affected by high levels of indebtedness. With families more entangled in debt, default rates have soared — taking interests up along with them.

According to Serasa Experian, a credit protection agency, demand for credit among consumers has dropped every month since May 2022.

“The reduction in inflation and in the basic interest rate has not yet had an effect on the economy,” Serasa Experian wrote in a