With the high level of family debt, the government launches its second debt renegotiation program in order to get Brazilians out of debt. To this end, debtors who earn up to 5 minimum wages will be able to use up to 20% of the FGTS balance to pay off their debts.
The measure proposed by the government is palliative and electoral in nature, without resolving the issue, by not attacking the structural causes of Brazilians’ high indebtedness.
One of these causes is the high cost of living caused by inflationary periods, which the government was responsible for with its expansionist fiscal policy. With the rise in prices of products and services, many Brazilians resorted to loans to pay their daily bills.
Another cause of high family debt is high interest rates, which makes it impossible for those who took out a loan to get out of debt. In part, the interest rate is very high in the country due to high public spending and a justice system that favors the debtor more and the creditor less.
If the government, instead of offering debt discount programs, which can even encourage more debt – after all, the debtor knows that the State will ultimately save him -, cut public spending and attacked legal uncertainty, the results would be much better and sustainable.
Unfortunately, as this path is more medium and long term, the government prefers to bet on Desentola 2.0 to collect electoral results, without actually resolving the issue.
