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Lula Plans $28B Debt Buyout to Aid Consumers

Bloomberg Markets •
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Brazil’s government plans to spend 15 billion reais to buy as much as 150 billion reais ($28 billion) of delinquent consumer debt from banks, part of President Luiz Inácio Lula da Silva’s push to ease the financial strain on households and bolster his bid for a fourth term.

The government will hold an auction in November to acquire bank debt portfolios covering individual obligations of as much as 10,000 reais that are between two and four-and-a-half years old, Planning Minister Bruno Moretti told reporters on Friday. Lula is signing a provisional measure authorizing the debt purchases and another banning online gambling in all of its forms.

The initiative is the latest in a series of measures Lula has rolled out ahead of Brazil’s Oct. 4 presidential election, as he seeks to shore up household finances after years of high borrowing costs. Polls show a tight race with conservative Senator Flávio Bolsonaro, with the two candidates statistically tied in several recent surveys.

Lula’s government has also increased Bolsa Familia benefits and taken steps to lower fuel costs.