Former Brazilian President Jair Bolsonaro will have caused a default of 10.6 billion reais (1.9 billion euros) at state-owned bank Caixa Económica Federal in a bid to win the presidential election, the UOL news portal reports.
In a series of reports, UOL told how in March, before the official election period, Bolsonaro issued two measures to extend credit to low-income debtors who supported the current president, Luiz Inácio Lula da Silva, and win more votes in this segment.
The unprecedented measures made it possible to pay out money, especially during the election period, but ultimately did not have the expected effect.
However, the recipients of these loans acted predictably and failed to pay Caixa Económica Federal’s loans, exposing the financial institution affiliated to Brazil’s central government to an unprecedented level of risk.
The report found that on March 17, 2022, Bolsonaro and the then president of Caixa, Pedro Guimarães, signed two interim measures. The first created a microcredit line for people with a “dirty name,” a phrase used in Brazil to describe debtors who can’t make loans.
Until the elections, Caixa borrowed 3 billion reais (560 million euros) in this program called SIM Digital, which allowed loans of 300 reais (56 euros), 1,000 reais (186 euros), including those who had acknowledged debts of up to 3,000 reais ( 560 euros).
This first interim measure stipulated that any bank could participate, but Caixa Económica Federal was the only company to take on the risk and the default rate of participants in this program is 80% this year, according to the current management of the state-owned bank.
Bolsonaro’s other interim measure allowed loans to Auxílio Brasil at very high interest rates, which could absorb much of the funds intended for participants in the Brazilian government’s main income transfer program.
Between the first and second rounds of the presidential election, Caixa Económica Federal allocated 7.6 billion reais (1.4 billion reais) as part of Brazil’s aid.
The program was criticized for cutting the amount of social benefits to pay for the loan and ended without warning shortly after Bolsonaro’s defeat at the hands of current president Luiz Inácio Lula da Silva.
According to UOL’s report, these and other actions caused Caixa Económica Federal’s short-term liquidity index — a risk indicator for financial institutions — to reach the lowest level ever recorded by the bank in the last quarter of 2022, which is 162 years old.
Former President Jair Bolsonaro and former President of Caixa Económica Federal Pedro Guimarães were questioned by UOL but did not comment.
Source: DN
