Lula’s team wants to suspend payroll loans from Auxílio Brasil and BPC

One in six beneficiaries of Auxílio Brasil and BPC (Benefício de Prestação Continuada) contracted the payroll loan created by President Jair Bolsonaro (PL), totaling R$ 9.5 billion in disbursements until November 1, in the middle of the election period.

The data are from the Ministry of Citizenship and are included in the final report of the Social Development technical group in the transition team, obtained by Sheet.

The team of the president-elect, Luiz Inácio Lula da Silva (PT), criticizes the measure and recommends the suspension of financing, as well as changing the legal framework to avoid over-indebtedness of families —which are precisely the most vulnerable layer of the population.

Auxílio Brasil beneficiaries are families living in poverty (up to R$210 per person) or extreme poverty (up to R$105 per person).

The BPC, on the other hand, is paid to seniors over 65 years of age or low-income people with disabilities.

As shown to Sheetpart of the beneficiaries resorted to financing to buy food, pay bills and even to finance the end of year celebrations.

“These people will have up to 40% of their benefit committed […]. The measure, clearly electoral, goes against the grain of social protection policies, compromising future benefits”, says the document.

If the individual is suspended or excluded from the program, the commitment equivalent to up to 40% of the benefit will continue to weigh on any other income that he may have.

The payroll loan for these benefits was created in March 2022 by Bolsonaro, through an MP (provisional measure) converted into law in August.

The regulations of the Ministry of Citizenship stipulate an interest ceiling of 3.5% per month (equivalent to 51.1% per year) and a maximum number of 24 installments for payment.

Most banks, however, did not want to offer the credit line due to the high risk of default, in addition to possible damage to the image of the institutions by embarking on a policy that, in practice, encourages the indebtedness of a vulnerable population.

Caixa was one of the few institutions to launch the Auxílio Brasil payroll loan. The offering of operations began on October 11, between the first and second rounds of elections.

After Bolsonaro’s defeat, the public bank restricted the financing of the line – which is the subject of judicial questioning. The future president of Caixa, Rita Serrano, is critical of the modality.

The concern of the transition is with families who have already contracted the operation and who, for some reason, may lose the benefit because they do not fit the payment criteria, or because the Auxílio Brasil must undergo changes.

Lula’s team wants to re-discuss the design and formulate a new Bolsa Familia, prioritizing payment per person. Today, a minimum amount of BRL 600 per family is transferred, which encouraged the division of registrations and allowed the atypical inclusion of 3.7 million families with a single member during the Bolsonaro administration.

With the changes, it is possible that some families will have their benefit reduced, blocked or even suspended. The debt, on the other hand, would continue to put pressure on the budgets of households that no longer have enough income for their survival.

“People who take payroll loans will have their family income compromised, whether they remain in the income transfer program or not, even if they leave due to a redesign measure, investigation or impossibility of updating information. future, with the transfer of substantial amounts of income from these families to the financial system”, says the document.

The technical group itself states that the commitment of the family budget to the payroll can end up leading to a “reduction in the redesign margin of the Brazil Aid”, so as not to aggravate the situation of the families.

The recommendation for the transition is to “suspend the payroll until the STF pronounces [Supremo Tribunal Federal]” and carry out an “assessment of the damage caused”. Other suggestions include reducing interest rates and creating an information panel on payroll loans.

Lula’s team also announced, in early December, that it intends to forward to the control bodies the findings involving Auxílio Brasil for an investigation into Bolsonaro’s abuse of political and economic power on the eve of the election. If successful, the investigation may result in the ineligibility of the managers involved.