With semi-isolation in place, 91 million Brazilians stopped paying some debt.

Research conducted by the Locomotiva Institute shows that after a month of social isolation caused by the new coronavirus pandemic, 58% of Brazilians have stopped paying some debt – representing 91,040 million people. Among those who have overdue bills, the average found was four unpaid bills. The research was carried out on the 14th and 15th of this month, with 1.131 people aged 16 or older, from 72 cities in all states of the Federation.

According to Renato Meirelles, president of the Locomotiva Institute, Covid-19 arrived at the end of one of the longest economic crises in Brazilian history. "It found a population without savings and increasingly less protected by social safety nets."

Meirelles points out that one of the most serious economic consequences of this pandemic is the complete inability of a significant portion of the population to pay their bills.

According to him, there is a predominance of indebtedness by social class. "The lower the income, the greater the indebtedness related to simpler, day-to-day expenses."

Renato Meirelles states that the Covid-19 pandemic arrived at the end of one of the longest economic crises in Brazilian history. Valter Campanato/Agência Brasil Archive

Water, electricity, and rent bills were overdue for 28%, 33%, and 35% of respondents, respectively. "In classes A and B, the biggest problems are credit cards, overdrafts, and school tuition," Meirelles reported.

Among overdue bills, installment plans and store credit lead the list, with 46% of responses; followed by overdraft and credit cards (37% each) and bank loan installments (36%).

Regarding other overdue bills, which include gym memberships, maintenance expenses, and general services (with 36% overdue), Renato Meirelles analyzes that, with the prolongation of the crisis, these expenses will be cut and the share of these items in the total of overdue bills should decrease.

Indebtedness

Renato Meirelles believes that the volume of debt per capita (per individual) - which in the first month of isolation recorded an average of four accounts per person - is expected to grow in the next period.

"The research paints a rather complicated picture for payment compliance, with a growing number of people already admitting that they will not be able to meet all their obligations next month."

Phone and internet bills, in particular, are expected to see an increase in delinquency rates in May, according to the president of the Locomotiva Institute. He stated that social isolation has increased data usage, allowing children to continue studying, as well as for entertainment and information. "Families expect the government and companies to guarantee access to this service, which is considered essential for a large part of the Brazilian population," he noted.

Meirelles also says that, just as happened at the height of the recent economic crisis in the country, the so-called "bill rotation" is likely to occur again, in which the consumer chooses which bills they can pay and which they will delay, according to the interest rate and the negotiation period before the service is cut off by the provider.

"Since most Brazilians believe the crisis will be long, the tendency is for consumers to think carefully before spending," Meirelles pointed out.