Brazil payroll loan delinquency diverges for public and private sectors

Data from the Central Bank indicates divergent trends in payroll-deductible loan (consignado) delinquency rates in Brazil. The default rate for public servants has declined from a recent peak of 2.9% in December 2025 to 2.6% in June.

Conversely, delinquency among private sector workers has risen sharply. After sitting near the historical average of 5.5% in December 2025, the rate climbed to 8.6% in June, the highest level recorded since March 2011.

Experts attribute the improvement among public servants to increased oversight by financial institutions following scandals involving improper deductions from INSS benefits. Meanwhile, the private sector's rising delinquency is linked to a massive expansion in credit volume following a 2025 provisional measure that allowed workers to negotiate directly with banks. This expansion, combined with high labor turnover in the private sector, has contributed to the increased risk.