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Economy May 11, 2026 01:31 PM

BTG: Lula's Consumer Debt Renegotiation Did Not Expand Credit for Beneficiaries

Bank report finds first-phase program failed to increase lending, a factor that may have limited political upside ahead of October vote

By Nina Shah

A BTG Pactual analysis concludes that the initial 2023 consumer debt renegotiation program launched under President Luiz Inacio Lula da Silva did not lead to greater access to credit for those who benefited. The finding, drawn from an assessment of the program's first iteration by BTG economists Tiago Berriel and Bruno Martins, may help explain why the initiative did not translate into improved popularity for the president before the October elections. Lula unveiled an expanded version of the program last week, extending federal guarantees to a wider income band.

BTG: Lula's Consumer Debt Renegotiation Did Not Expand Credit for Beneficiaries

Key Points

  • BTG Pactual's analysis finds no increase in credit access for beneficiaries of the 2023 program.
  • The report was authored by economists Tiago Berriel and Bruno Martins and issued on Monday.
  • Policy change last week expanded federal guarantees to borrowers earning up to five times the minimum wage, up from twice the minimum wage in the initial phase.

A report released on Monday by BTG Pactual finds that the consumer debt renegotiation program introduced in 2023 under President Luiz Inacio Lula da Silva did not result in an expansion of credit for people who took part. The assessment, prepared by BTG economists Tiago Berriel, a former central bank director, and Bruno Martins, focuses on the initial phase of the program and concludes that beneficiaries did not see increased lending access as a consequence.

The finding is notable because the program was presented as a policy tool to relieve household balance-sheet stress and to restore consumer access to credit. According to the report, rising household indebtedness combined with persistently high interest rates on credit lines limited consumers from reaping potential gains from lower unemployment and easing inflation. Those constraints, BTG's economists argue, helped blunt the program's intended effect on credit flows to participating households.

Last week, the administration announced an updated version of the initiative. The new iteration broadens eligibility for federal guarantees on renegotiated debt, covering borrowers earning up to five times the minimum wage, compared with a cutoff of twice the minimum wage under the initial program. The expansion represents a central element of the president's electoral strategy.

BTG's assessment of the first version of the program - and the lack of a credit expansion for beneficiaries - may also shed light on its limited political traction. The report suggests this shortfall could be a factor in why the initiative did not materially improve the president's popularity in the runup to the October elections.

The economists' conclusions are drawn from their analysis of the program's first phase and do not include conclusions about the effects of the updated program announced last week. The report's findings focus on observed outcomes from the 2023 rollout rather than on projections for future versions.

Summary of findings

  • BTG Pactual concludes the 2023 consumer debt renegotiation program did not expand credit for beneficiaries.
  • The report was prepared by Tiago Berriel and Bruno Martins and released on Monday.
  • The revised program, announced last week, raises the income threshold for federal guarantees from twice to five times the minimum wage.

Risks

  • Effectiveness risk: The first-phase findings indicate the program's design did not translate into expanded lending for beneficiaries, which raises questions about the revised program's ability to deliver different results - this impacts consumer credit and retail banking sectors.
  • Political risk: The lack of measurable credit expansion may have limited the policy's ability to boost electoral popularity ahead of the October vote - this affects political economy dynamics relevant to policy-dependent sectors.
  • Household balance-sheet risk: High household indebtedness combined with elevated interest rates on credit lines constrained the intended benefits of the program, which has implications for consumer spending and financial stability in household lending markets.

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