Brazil eyes new debt relief with federal guarantees for consumers

By Bernardo Caram

BRASILIA, April 7 (Reuters) - ‌Brazil's government is preparing ​a ​new credit renegotiation program backed by federal guarantees to curb rising household debt, two sources with direct knowledge of the matter said.

The initiative, expected to be ‌announced this week, revives a strategy used early in President Luiz Inacio Lula ⁠da Silva's term. The sources requested anonymity because the plans are not yet public.

The move comes as Lula ‌pushes measures to ease pressure on ‌household budgets ahead of October's election, with his lead over main rival Senator Flavio Bolsonaro narrowing to a statistical tie in runoff polls.

The previous "Desenrola" program, rolled out between late ​2023 and 2024, offered guarantees via a government fund for low-income borrowers earning up to two times the minimum wage. By absorbing part of the default risk, it encouraged lenders ⁠to grant steeper discounts and extend credit for debt settlement.

The new program is expected to target delinquent borrowers, especially low-income households, ​as well as individuals current on payments but with high debt commitments, one of the sources said. It will also include a dedicated track for ​micro, small and medium-sized enterprises, the source added.

Finance Minister ‌Dario Durigan told journalists in Brasilia later on Tuesday that the government's plan to reduce household indebtedness is under discussion with Lula, but that ⁠he would not share the measures until they are ready.

Still, he confirmed the current version of the plan includes actions to address indebtedness by individuals and companies.

To reduce borrowing costs, the government is likely to ⁠inject funds into the Operations Guarantee Fund, also used in Desenrola, the sources said.

One option under discussion is ​channeling "forgotten" funds left in the financial system into the program, one of the sources said. These funds currently total 10.5 billion reais ($2.03 billion), according to central bank data.

Central bank figures show household debt service reached 29.3% ‌of income in January, matching October 2025 and marking the highest level since the series began in 2011.

Participants in the new renegotiation scheme ‌will also face restrictions on online betting, the sources added.

Durigan said the government has been discussing measures ⁠to limit consumers' future indebtedness. The ‌minister did not provide details, but ​he mentioned as an example debts from online betting.

($1 = 5.1679 reais)

(Reporting by Bernardo Caram in Brasilia, Writing by Marcela Ayres, Editing by Rod Nickel and ‌Cynthia Osterman)

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