The government of Lula da Silva it deals, and a lot, with the poorest social segment. But it takes time to provide solutions to a vast sector of the middle class, cruelly in debt and unable to meet payment commitments. The data is eloquent: almost 79% of Brazilian families have difficulties paying off their credit cards or are forced to delay disbursements. This has a direct impact on consumption and explains, to a large extent, how zero inflation was reached in June.
He Central bank reveal that to refinance the cards, the main source of insolvency, users come to pay annual interest of 455%, which represents 15.35% per month. It was the National Confederation of Commerce of Goods and Services that released these numbers last Tuesday. He also reported that a fifth of the debtors is “heavily indebted.” And they warned that the number of defaulters is the largest in the historical series, which began in 2010.
A foreign correspondent, who asked not to be named, commented in a group of WhatsApp that he had requested a credit of 1,200 dollars in February; In this way, he intended to prevent the accumulation of debts on his card, which belonged to one of the large Brazilian banks. The loan was paid in three installments and the total gave him no less than 2,000 dollars (10,020 reais). In other words, you must pay the initial value plus another two-thirds. This high credit cost justifies the low demand for loans in banks: it fell 18%.
Brazil inflation slowed below target in June
In the city of São Paulo, with 11.5 million inhabitants, half the population belongs to classes E and D, made up of families that receive the lowest salaries (between 260 and 900 dollars). That income is enough for them, basically, to buy food and pay rent. The middle classes (C and B) are the majority in the remaining half (generally income ranges from $2,100 to $4,500 per month).
What is remarkable about this portion of the population is the fierce impact of the Covid 19 pandemic. A sixth part suffered a drop of more than half of their benefits, compared to those existing in 2019, and they have been forced to do temporary jobs to survive. The hairdresser Solange Ferreira, who came from the Northeast to try life in the capital of São Paulo, set up her own salon and with her work managed to buy a house for herself and her parents. At the same time, she was starting medical school. Covid involved, she must sell the hairdresser. She concludes: “Dignity is paying the bills up to date and being able to eat”.
These millions of Brazilians from classes C and B had to disappear, for example, from prepaid; and that happened in a period –that of Jair Bolsonaro- where the public health system was literally destroyed.
It was during the period of the ultra-right government that the autonomy of the Central Bank prospered, an old ultra-liberal procedure that allowed these banks to be put at the service of private banking. From that instance, in two years the basic interest rate went from 2% to 13.75%.
The consequences are being felt now: with interests that go up in the elevator, and salaries that remain on the zero floor. Consequently, the Brazilian middle classes (and why not the world?) were unable to enter the paradise that the now-defunct “Welfare State” once destined for them.
Today President Lula announced that, starting next Monday, the plan called “Unroll Brazil”; whose obvious translation is “Unroll Brazil”. It is intended for debtors who will have income of up to $4,200; from now on it will be able to restructure its liabilities with the banks, in 12 installments; a long-awaited relief.