The Map of Delinquency and Debt Renegotiation in Brazil developed by October registered the biggest increase of the year with 63.4 million Brazilians in default. In order to understand what this number means let’s make a comparison with the Index of Economically Active Population (EAP) in the country that is the number of employed people.
In October of this year, Brazil registered a reduction in unemployment, bringing the number of employed people to 90.2 million according (Institute of Applied Economic Research) Relating defaults to the number of inhabitants in the country, 30% of the population has a negative CPF.
However, as this total includes people outside the working age (children and adolescents), relating default to the PEA, more than 70% of people have already lost the ability to pay their debts.
The sum of debts exceeds R$253.65 billion, an average of more than R$4,000 per person and R$1,189 per debt. It is a very high number for a country with an average salary of R$2,543. Banks and credit cards are the main responsible for defaults with 28.70% of total debt followed by basic bills, such as water and electricity with 23.5% and by retail 13%.
As a financial educator, I’ve been serving people from all over Brazil and from various social classes for over ten years and I can say that, in relation to loans, most people don’t even remember what they spent the money on.
Most of these operations were done just because the bank manager offered it or because of the publicity There was no goal not even a plan The story of the “parcels that fit in your pocket” made many people take out a loan loaded with interest which compromises the budget for several years without the slightest need.
Today, a huge number of people cannot rent a property, raise capital to open a business or even get a formal job because they have the popular “dirty name”. As much as it is irregular behaviour to deny employment to those who are denied employment, companies prefer to give opportunities to those who have their accounts up to date, and, as a result, it becomes increasingly difficult to obtain income and get out of default.
Brazil needs financial education, as only then will the population know how to make good use of credit and will understand the damage that financial operations with high interest rates can do to the budget and to practical life as a whole. But, it seems, governments are more focused on populist measures, such as the distribution of all kinds of aid, than on helping the population to think with their own head. It is much harder to govern people who are aware of their rights, but much easier to manipulate those who have not yet learned the rules of the game.