The latest version of the government’s debt renegotiation initiative, Desenrola, introduced this week by President Lula‘s administration, will cover less than 1% of existing debts. This is due to its strict eligibility requirements—income limited to five minimum wages and debts overdue for up to two years—which do not reflect the actual situation faced by Brazilian households. Eduardo Martins, managing partner at MGC Holding and owner of Crediativos, the country’s leading independent distressed-debt recovery firm, said this. He also argued that banks have already shed a significant share of their “young” delinquent portfolios because of accounting rules introduced last year.
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