Private credit dynamics can improve with government actions

The macroeconomic picture last year was favourable credit: the growth of GDPthe fall of unemployment and the interest rates and the Unroll the program they were positive factors for the expansion of credit and for its decrease default. What was expected, however, did not occur: the bank credit/GDP ratio remained stagnant and the number of judicial recoveries, bankruptcies and negative natural and legal persons increased.

The total value of negative debts has grown more than the credit of the national financial system. The picture was similar to that of 2022. Although some companies and citizens have improved, on average the picture is negative and overall the debt dynamics of the non-financial sector is deteriorating.

Everyone loses: citizens, businesses, banks, the government and Brazil. It’s not sustainable. There are two possible scenarios. The first is a deleveraging process, which takes time (years) and is painful (anemic growth). It’s insisting on more of the same thing. The other is a change in this dynamic, making two corrections that depend only on the Executive Power.

The first is to change the current intermediation paradigm. Laws: remove inflationary debris and improve credit pricing standardization, transparency, Law 14.181, the responsibility of managers, credit agencies and limit assignment, and modify the taxation of intermediation.

The other fix is ​​to reduce the voracity in collecting tax debts. This is fiscal autophagy that weakens the financial health of the economy and the country’s ability to grow. It is a fact: Serasa’s total negative debts are R$493 billion – including the financial system, retail trade, services and utilities, equivalent to a tenth of the debts performed by the Financial Administration, which amount to R$5,057 billion.

The majority are neither “bad payers” nor tax evaders. They are in a debt trap and can’t get out. Temporary liquidity problems turned into unpayable tax liabilities. Sanctions of 232.8% per year (0.33% daily), to which must be added the Selic correction, mistakenly called monetary correction.

There is a misinterpretation of the Fiscal Responsibility Act concerning the renunciation of revenue and the dynamics of collection. It is paradoxical, but if they applied more reasonable sanctions and a monetary correction instead of the Selic correction, they would collect more with positive impacts on defaults and growth. There is an urgent need to modernize the intermediation paradigm and end fiscal autophagy. Brazil is in a hurry to grow.