Brazil launches Desenrola 3.0 with government purchases of household debt
Brazil launched Desenrola 3.0 with a new route for reducing overdue household debt: the government can buy portfolios from lenders at auction and pass the purchase discount to borrowers. It has allocated 15 billion reais to the program. Officials aim to buy about 150 billion reais in face-value debts for roughly a tenth of that amount and reach up to 15 million people. The auction is planned for November, after the October elections.
Economics & Markets··Midday
The state takes over portfolio bargaining
Brazil launched Desenrola Brasil 3.0 after President Lula signed the measure in São Paulo on 25 September. Under the new phase, the federal government can buy overdue household debt portfolios from financial institutions at auction and pass the purchase discount to borrowers. In earlier phases, each borrower bargained with a bank. The change moves the negotiation to a single government purchase, while families are meant to receive the resulting reduction in what they owe.[1], [2]
Fifteen billion reais funds the planned purchase
The government allocated 15 billion reais to the programme. Officials aim to remove about half of a 300 billion reais stock of old debt, buying roughly 150 billion reais in face-value claims for a tenth of their stated value or less. They expect the scheme to reach up to 15 million people. The first two phases reached 25 million people; the first renegotiated 53 billion reais and the second another 22 billion reais.[1], [2]
The auction follows the October election
The planned auction is in November, after the October elections, and a later timetable places the purchases in February. The scope covers card and personal-loan debts overdue for between two and four and a half years. Borrowers would settle the remaining amount in cash or instalments after the discount. The announcement did not resolve whether debt bought by the government would ultimately be collected or forgiven, leaving that part of the programme to be specified.[1]
