Brazil faces higher debt risk and record delinquency as economy strains

Economist Igor Lucena warned that Brazil's lack of a clear fiscal‑control path could push the exchange rate above R$ 6 per US dollar, up from the current R$ 5.20‑5.30 range. He linked rising public debt to reduced investor confidence, heightened market volatility and the risk of a repeat of the 2015 slowdown, noting that the upcoming presidential election, US interest‑rate moves and fiscal dynamics are key factors.

The Central Bank reported that average credit delinquency reached a historic high of 4.7% in May, with personal‑credit arrears at 5.6% and corporate arrears at 3.2%. Household indebtedness remains near 50% of annual income, and about 47% of the debt is held by financial institutions. The government’s Desenrola 2.0 program, which has already facilitated over 1.4 million debt renegotiations with discounts up to 85%, aims to curb this trend.

Together, the fiscal uncertainty and rising delinquency underscore mounting pressures on Brazil’s currency, stock market and broader economic stability.