Brazil Supreme Court maintains R$ 600 existential minimum

The Brazilian Supreme Federal Court (STF) has upheld R$ 600 as the parameter for the ‘existential minimum,’ a mechanism designed to protect the subsistence of overindebted consumers. Although the justices acknowledged that this amount is insufficient to cover the actual cost of living, the decision in ADPF 1.097 aims to balance personal dignity with access to the credit market.

Relayed by Minister André Mendonça, the ruling stipulates that the National Monetary Council must conduct annual technical studies to determine if the value requires updating. The court noted that setting a higher existential minimum would increase the non-negotiable portion of family budgets, potentially causing banks to raise interest rates or deny loans to low-income populations due to perceived default risks. The goal is to prevent vulnerable citizens from being excluded from formal credit and forced into informal or illicit markets.

Additionally, the Council and the Federal Executive are tasked with periodically evaluating the adequacy of the criteria used to determine the preservation of the existential minimum.