The new edition of “Desenrola”, the debt renegotiation program launched Monday (4) by the Brazilian government, is seen by experts and industry groups as a useful measure, but one with only a short-term effect and limited impact on the economy and banks’ balance sheets. There is also a risk of creating “moral hazard,” in which consumers may stop paying renegotiated debts in the belief that another opportunity will come later.
Negotiated with banks over the past few weeks, Desenrola is designed to give relief to households, which are facing record levels of debt. The government sees this as a critical issue for Brazilians in an election year.
“We are trying to find a way to loosen the noose around these people’s…