In Brazil, 62 million face insolvency

Brazil’s insolvency rate with the financial system reached 3.04 percent and $25.7 billion of the $844.6 billion debt.

These are preliminary figures for September, released by the Central Bank, and make no distinction between firms and natural persons. The Central Bank rates as insolvency nonpayment overdue for more than 90 days.

Debts owed to banks, credit card operators, financial institutions and leasing firms affects half of Brazilians (52 percent) registered under the Protection Credit Service, SPC Brasil. According to the institution, 62.6 million people faced delinquency in September—the equivalent of the population in Italy.

Most of the total debt is owed to public banks (46.27 percent), followed by private national capital institutes (41.28 percent), and foreign capital institutes (12.45 percent).

Crisis, unemployment, and debt

Luiz Rabi, an economist with Serasa Experian, which provides the market with indebtedness data, pointed out that insolvency surges side by side with unemployment, adding that the country had 51.8 insolvents in 2014, when the crisis set in.

Despite a reduction in unemployment in the third quarter this year, joblessness affects 12.5 million people, as per data from Brazil’s statistics bureau IBGE.

Marcela Kawauti, chief economist with SPC Brasil, says the recovery of employment—and income as a result—allows delinquents to settle overdue debts, especially among the poorest. “When consumers with lower income are able to return to the labor market, they can pay the debt and solve the problem,” she said.