Brazil's federal government is finalizing a new credit renegotiation program that would use federal guarantees to ease mounting household debt pressures, two sources with direct knowledge of the plans said. The initiative is due to be announced this week and revisits a policy direction implemented earlier in President Luiz Inacio Lula da Silva's term, the sources added. They asked not to be identified because the plans remain confidential.
The move is being advanced as the president promotes measures to relieve household budgets ahead of the October election. Recent runoff polling has shown his lead over Senator Flavio Bolsonaro narrowing to a statistical tie, according to the sources.
Officials are drawing on elements of the previous "Desenrola" program, which was introduced between late 2023 and 2024 and provided guarantees through a government fund for lower-income borrowers earning up to two times the minimum wage. By absorbing a portion of lenders' default risk, that scheme enabled banks to offer larger discounts and extend credit to settle outstanding obligations.
Under the forthcoming plan, the emphasis will be on delinquent borrowers, with particular attention to low-income households. The program is also expected to cover people who remain current on payments but carry high debt commitments, one of the sources said. In addition, there will be a dedicated track for micro, small and medium-sized enterprises.
To lower the cost of borrowing for participating debtors, the government is likely to inject additional resources into the Operations Guarantee Fund - the same vehicle used in the Desenrola initiative, the sources said. One option under discussion is to redirect so-called "forgotten" funds that currently remain in the financial system into the guarantee program. Central bank data show those funds amount to 10.5 billion reais, which is equal to $2.03 billion based on the reported exchange rate of $1 = 5.1679 reais.
Central bank statistics indicate household debt service reached 29.3% of income in January, matching October 2025 and marking the highest level since that series began in 2011. The elevated ratio is cited as a key rationale for the government’s push to expand renegotiation support.
Participants in the new renegotiation scheme will also face limits on online betting, the sources said. Details on implementation, eligibility and precise funding mechanisms were not disclosed by the sources, who stressed that discussions remain ongoing and plans have yet to be made public.
Context and next steps
Officials appear to be refining the program mechanics and funding sources ahead of the formal announcement. How quickly lenders and affected borrowers will respond, how the Operations Guarantee Fund will be capitalized, and the precise interaction with existing credit arrangements were not specified by the sources.