Household indebtedness reached an unprecedented level in Brazil in 2022. According to a survey by the CNC (National Confederation of Commerce in Goods, Services and Tourism) released this Thursday (19), 77.9% of consumers ended the year with some outstanding debt—the fourth consecutive record.
The value represents an increase of seven percentage points compared to 2021, when the rate was 70.9%.
The current scenario reflects the increase in household debt during the pandemic, which now needs to carry expensive debts in a period of high inflation and high interest rates.
The data are part of Peic (Consumer Indebtedness and Default Research), which consulted about 18 thousand people in all capitals of Brazil and the Federal District.
The survey uses the same concept of debt as the Central Bank, which considers all outstanding amounts contracted with financial institutions —credit card, overdraft and store booklet, for example. The data, therefore, does not necessarily mean that the bills are overdue.
The proportion of people with bills to pay in Brazil rose 14.3 points compared to 2019, before the pandemic. The historical series shows how the health crisis changed the trend that had been taking shape in Brazil.
Previously, indebtedness followed a downward trend, especially among the poorest. Now the scenario is opposite. In relation to 2021, debts grew more intensely in the lower income ranges.
The CNC survey shows that 78.9% of people earning less than ten minimum wages have bills to pay. In the upper range, the rate is 74.3%.
The survey also detailed the profile of Brazilians currently in debt. Most of the people are women, aged up to 35, with incomplete secondary education, income of up to ten minimum wages and who live in the South and Southeast regions of the country.
Debt hampers economic growth
Another problem revealed by the survey is the number of people with a very high level of accounts payable. Never before have so many people (17.6%) said they were heavily indebted, that is, with maturities that compromise a large part of their income.
On average, for every R$1,000 received, Brazilians spent R$302 paying off debts. However, one in five consumers (21.5%) needed to use more than half of their income to meet financial obligations.
Guilherme Mercês, economics and innovation director at CNC, recalled that indebtedness was a recurrent issue during the election campaign, given its importance for economic growth.
He points out that the need to carry very expensive debts causes a squeeze on the family budget which, in turn, prevents the increase in consumption, mitigates the effects of income transfer programs and harms the recovery of the job market. The consequence of this is a constraint on Brazil’s economic growth.
The director recalled that the theme is on the radar of the government of President Luiz Inácio Lula da Silva (PT). Recently, the Minister of Finance, Fernando Haddad, announced that he intends to launch a program to deal with the matter.
In a press conference to release CNC data, Mercês highlighted that over-indebtedness is a problem that typically affects low-income families, and took the opportunity to link the topic with the current discussion on public accounts.
“If over-indebtedness is a problem for the poorest families —and this over-indebtedness is related to the cost of credit and inflation that squeezes the budget—, one of the key factors for solving this problem is to have a Brazilian economy with more civilized interest rates, more healthy. High interest is synonymous with expensive debt,” he said.
The statement touches on one of the discussions that has gained centrality in the early days of Lula’s government. Charged with the commitments he will have with fiscal responsibility, the president has been defending the importance of social responsibility. Economists, however, argue that the issues are not necessarily antagonistic.
For the CNC director, debt renegotiation programs are essential to stop the anguish of indebted Brazilians. “But, in structural terms, what will solve the problem is a lower interest rate that allows the cost of credit to become cheaper.”
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