Payroll for beneficiaries of Auxílio Brasil and BPC can be announced this Thursday

The Jair Bolsonaro (PL) government is studying an MP (provisional measure) to allow the contracting of payroll-deductible loans by beneficiaries of Auxílio Brasil and BPC (Benefício de Prestação Continuada).

Estimates from the departments involved indicate that the change could provide Auxílio Brasil families with up to R$30 billion in financing. In the case of the BPC public, the potential is estimated at R$ 19 billion.

Technicians seek to close the text so that the proposal is announced along with the package of measures that should be presented on Thursday (17) at Palácio do Planalto.

The announcement should also include the anticipation of the 13th of INSS retirees and pensioners to April and May and the launch of a microcredit program.

The MP should also increase the limit of the salary or benefit that can be committed in the provision of a consigned operation, from 35% to 40%.

In the year in which he will seek reelection, Bolsonaro seeks measures that result in some relief in the pockets of voters at a time when high inflation has restricted the purchasing power of Brazilians.

Allies of the president say that his reappointment is directly linked to an improvement in the economic scenario and in people’s quality of life.

The Minister of Citizenship, João Roma, told sheet that the measure would be an instrument to give access to cheaper credit to almost 23 million families covered by the two social programs.

Consumer protection organizations and specialists, in turn, criticize the initiative for opening the door to greater indebtedness for a portion of the population that already depends on government transfers to cover their basic expenses.

The BPC pays a minimum wage (R$ 1,212) to elderly people over 65 years of age and people with disabilities who live in a low-income situation. Auxílio Brasil now transfers at least R$400 per family, thanks to a temporary increase until December 2022. Before, the average benefit was R$224.

Today, only INSS (National Social Security Institute) retirees and pensioners, public servants and salaried employees in the private sector have access to payroll-deductible loans, which offer lower interest rates as they are guaranteed that the value of the installment will be deducted directly from the payroll —which reduces default risk.

In the modalities of personal credit, without guarantee, the interest is higher, even if the borrower is already a customer of the financial institution.

In the case of low-income families, the target audience of Auxílio Brasil and BPC, many do not even have access to credit lines. Banks avoid lending to these people because of the higher risk of default.

“I am a federal deputy [licenciado], the bank analyzes that I have a salary until December, I can pay a payroll loan at 1.5% per month. On the other hand, a person who is in Auxílio Brasil, if he wants R$50, will pay 10% a month in the hand of a loan shark, because he will not have the banking sector,” said Roma.

The Minister of Citizenship also stated that low-income families are already in debt, and the authorization for payroll loans can help them to reorganize the domestic budget without such a heavy burden of interest.

Roma mentioned that, according to a survey by the CNC (National Confederation of Trade in Goods, Services and Tourism), 26% of the BRL 84 billion provided for in Auxílio Brasil will be used by families to pay off existing debts.

“The population is in debt and needs access to money with cheaper interest,” said the minister. “When we play the consignment, the bank risk drops. And then the citizen can get cheaper money, because we are giving the guarantee that it will be deducted from the payroll.”

According to Roma, there is today an “inverted pyramid” in Brazil. “The rich get banking access and cheap interest, and the poor pay a lot more,” he said, countering criticism that the measure would end up benefiting banks. “This is the measure that brings precisely this protection and legal security to the poor.”

The government has already tried, last year, to authorize the granting of payroll-deductible loans with Auxílio Brasil as a guarantee. The beneficiary could commit up to 30% of the value of the benefit with the provision of financing.

The change was included in the MP that created the social benefit in place of Bolsa Família, but ended up being excluded from the text during the process in the National Congress.

The Idec (Brazilian Institute for Consumer Protection) is critical of the release of payroll loans to beneficiaries of the social program. The entity said, at the time the proposal was being processed, that the measure would become a trap for the most vulnerable consumers and would generate “more impoverishment of the population”.

At the time of the proceedings, opposition parliamentarians were also against the proposal.