By Bernardo Caram
BRASILIA, April 7 (Reuters) - Brazil's government is preparing a new credit renegotiation program backed by federal guarantees to curb rising household debt, two sources with direct knowledge of the matter said.
The initiative, expected to be announced this week, revives a strategy used early in President Luiz Inacio Lula da Silva's term. The sources requested anonymity because the plans are not yet public.
The move comes as Lula pushes measures to ease pressure on household budgets
ahead of October's election, with his lead over main rival Senator Flavio Bolsonaro narrowing to a statistical tie in runoff polls.
The previous "Desenrola" program, rolled out between late 2023 and 2024, offered guarantees via a government fund for low-income borrowers earning up to two times the minimum wage. By absorbing part of the default risk, it encouraged lenders to grant steeper discounts and extend credit for debt settlement.
The new program is expected to target delinquent borrowers, especially low-income households, as well as individuals current on payments but with high debt commitments, one of the sources said. It will also include a dedicated track for micro, small and medium-sized enterprises, the source added.
To reduce borrowing costs, the government is likely to inject funds into the Operations Guarantee Fund, also used in Desenrola, the sources said.
One option under discussion is channeling "forgotten" funds left in the financial system into the program, one of the sources said. These funds currently total 10.5 billion reais ($2.03 billion), according to central bank data.
Central bank figures show household debt service reached 29.3% of income in January, matching October 2025 and marking the highest level since the series began in 2011.
Participants in the new renegotiation scheme will also face restrictions on online betting, the sources added.
($1 = 5.1679 reais)
(Reporting by Bernardo Caram in Brasilia, Writing by Marcela Ayres, Editing by Rod Nickel)
