Even as Brazil celebrates a historic low unemployment rate of 6.1% and average monthly income climbing above R$3,722, a troubling paradox is unfolding. Household debt has surged to a record 80.9% of income, the highest level ever recorded by the National Confederation of Commerce. Nearly 30% of families are behind on their payments, a stark contrast to the nation's seemingly strong economic indicators.
The government has stepped in with the 'Novo Desenrola Brasil' program, a second-round debt renegotiation initiative designed to ease financial pressure on up to 20 million people. The program aims to restructure as much as R$58 billion in old and new debts. Its predecessor, launched in 2023, successfully renegotiated R$53.2 billion for 15 million Brazilians, offering temporary relief.
However, that relief was short-lived. The roots of the current crisis trace back to the pandemic era, when the central bank slashed the Selic interest rate to a historic low of 2% to stimulate the economy. This made credit cheap and accessible, fueling a consumption boom that left many families deeply indebted. As the economy reopened, inflation surged, forcing a sharp reversal in monetary policy.
The central bank aggressively hiked interest rates, pushing the Selic to 13.75% by August 2022. A brief period of rate cuts in 2023 and 2024 offered a glimmer of hope, but global uncertainties, including political shifts in the United States, reignited inflation. By June 2025, the Selic had soared to 15% per year, its highest level since 2006, making debt servicing even more punishing for households.
Economist Flávio Ataliba from FGV Ibre explains that a hot job market alone isn't enough to fix household budgets. "It's entirely possible to have a heated labor market and, at the same time, more indebted families," he states. Many families are still carrying debt accumulated during the pandemic, with the share of income committed to debt payments reaching a record 29.3% in early 2025.
The cost of living is a major culprit. Data from the IBGE shows that essential expenses like housing, transportation, health, education, and food consumed 41.8% of family budgets in March 2025. Food inflation, in particular, has been volatile and painful. Prices for basic items like rice, beans, milk, and meat have seen spikes far above general inflation, with meat prices jumping over 21% in the year leading to January 2025.
A survey by Quaest reveals the human impact: 71% of Brazilians say they can buy less than they could a year ago. Economist Olívia Resende points to behavioral factors, noting that people often focus on whether a monthly installment fits their budget rather than the total cost of the debt. "Small installments seem harmless individually, but together they compromise the budget," she says, highlighting how marketing and easy digital credit access perpetuate this cycle.
While the new Desenrola program offers a lifeline, the underlying economic pressures—from high interest rates and volatile food prices to ingrained spending habits—suggest that for millions of Brazilian families, escaping the debt trap will require more than just a government program. It will demand a fundamental shift in both economic conditions and financial behavior. Based on reporting from g1.