Existential minimum doubles and adds to the Unroll for the resumption of consumption – 06/20/2023 – Maria Inês Dolci

“Justice is not always slow, but it does not fail”. But the announcement made by President Luiz Inácio Lula da Silva that the existential minimum will be almost doubled – from R$ 303 to R$ 600 – is in line with justice, albeit belatedly.

It joins the Desenrola program, aimed at renegotiating debts in band 1, of up to R$ 5,000 with a guarantee from the Federal Government, whose projection is to benefit 40 million people. Perhaps this combination of measures, in the medium term, will improve household consumption.

The existential minimum is the part of income that cannot be judicially confiscated to pay a debt. In July last year, then-president Jair Bolsonaro issued a decree that set this minimum at 25% of the minimum wage. A very low value, under any parameter, to provide basic conditions for the citizen in the exercise of the fundamental rights defined in article 6 of the 1988 Constitution.

Last May, 11.8% of indebted families said they would not be able to pay their overdue debts, the highest proportion since October 2020. In the family income range between three and five minimum wages, the proportion of indebted people reached 79.6 % in May, according to Peic (Consumer Indebtedness and Default Survey), carried out by the CNC (National Confederation of Trade in Goods, Services and Tourism).

Indebtedness, caused by the chronic economic crisis and high interest rates, with very low growth and still worrying unemployment, was aggravated by the most critical periods of the pandemic. And it feeds a vicious circle: indebtedness rises, the economy does not grow, unemployment remains high and debts prevent an increase in consumption.

Without breaking this circle, household consumption will remain very limited. And low consumption will prevent the economy from growing consistently, generating jobs, taxes, etc.

It is good to remember that Desenrola is not a self-administered program. The provisional measure was published at the beginning of June, but the program’s platform should be opened next September for the public in band 1, which receives up to R$ 2,640, with debts of up to R$ 5,000. Before that, in July, the registration of creditors who meet the requirement to “de-negative” those who owe up to R$ 100 will be carried out.

In August, discount auctions will begin. After registering the debts, the creditors will inform the discounts granted to the debtors. For track 2, bank debts will be renegotiated directly with the banks, probably starting in July. It is estimated that 30 million people are in this range.

With the new existential minimum, Desenrola and the eventual reduction of the Selic rate, perhaps consumption will revive in the second half of 2023, but there is no certainty that this will happen, as it depends on other economic conditions, such as a reduction in unemployment and better salary. Hopefully the best happens!

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