💰 A bit of (debt) relief

Good morning! This week, debt relief program Desenrola Brasil comes to an end, the quiet zolpidem epidemic in Brazil, and the country’s latest literacy figures.

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Passing grade for government’s debt relief program

The federal government’s Desenrola Brasil debt relief program comes to an end today for individuals seeking to clear their credit scores. The scheme fulfilled its promises in terms of total renegotiated debt, but only managed to do so after being extended twice.

 Why it matters. Family consumption is a key economic driver in Brazil, typically accounting for more than 60 percent of the country’s gross domestic product. By helping low-income families get out of debt, the government hoped to jolt the economy.

By the numbers. Since kicking in in July last year, Desenrola has renegotiated BRL 52.93 billion (USD 10.37 billion) in debt, benefitting 15 million people. During the 2022 presidential campaign, then-candidate Luiz Inácio Lula da Silva said Desenrola would renegotiate BRL 50 billion, a promise his government has managed to keep.

• However, the expectation was for the scheme to benefit 30 million people, half of the final outcome. 

Steps along the way. The first phase of Desenrola allowed people earning up to BRL 20,000 a month to negotiate directly with their creditors. Meanwhile, the next phase targeted people with monthly incomes of up to twice the minimum wage (BRL 2,640).

• In July last year, at the program’s launch, The Brazilian Report spoke to Izis Ferreira, an economist at CNC who had followed the development of Desenrola closely. At the time, she told us that one of the big challenges would be getting poorer Brazilians to participate. 

• “There needs to be a lot of awareness campaigns, as many of them do not have regular internet access,” she said. And indeed that ended up being the big problem.

Communication breakdown. Desenrola suffered the negative effects of misinformation campaigns and the government’s own failures to package the program in a way that made sense to low-income Brazilians.

• The key feature of Desenrola was that it would not only allow Brazilians to renegotiate their debts, but it would clean up their credit scores and give them more access to new loans in the future.

• But experts complain that the difference between these two things hadn’t been made clear, and that Brazilians would see their names taken off bad payers’ lists and not realize that they still had a debt to renegotiate.

• Furthermore, a lack of a clear financial education push puts the 15 million benefitted people at risk of falling back into debt, overspending with their new-found credit wiggle room.

Brazil’s zolpidem “epidemic”

Brazil’s National Health Surveillance Agency (Anvisa) determined that it will increase the requirements for people to be able to purchase medicines containing the substance zolpidem, a hypnotic psychoactive drug prescribed for short-term treatments of insomnia and best known for being sold under the brand name Ambien.

 Why it matters. The decision seeks to contain something of an epidemic of zolpidem abuse in Brazil, which was only made worse by the Covid pandemic. Zolpidem is the second most sold controlled medicine in Brazil in the anxiolytic, tranquilizer and anticonvulsant category. Only clonazepam sells more.

• Something similar happened in France in 2017, when local health authorities increased the level of requirements for obtaining zolpidem, according to a BBC report.

The roots. According to the Brazilian Sleep Association, 73 million Brazilians suffer from insomnia — a disorder that is growing worldwide, fueled by our excessive use of screens. Studies show that the incidence is higher among women, due to hormonal and social factors.

Going off label. Doctors report that medicines of this type have been used for a long time and even for recreational purposes — in both cases, against Anvisa’s instructions. They also report that there has been a sharp increase in the number of hospitalizations related to the use of zolpidem.

• If used outside of medical recommendations, zolpidem can cause substance dependence and a series of side effects such as hallucinations, sleepwalking, and memory blackouts. 

By the numbers. From 2018 to 2022, sales of these products — which have existed on the Brazilian market for three decades — grew 66 percent, according to UOL.

What they are saying. “There was a significant increase in the number of users in the last year, and more significant in Brazil compared to the rest of the world. (…) [Doctors] started to prescribe it due to the false sense of security, that it would not generate dependence or abuse,” said Dalva Poyares, researcher at the Sleep Institute, to CNN Brasil.

• After the zolpidem patent expired in 2007, several companies that began producing the medicine in Brazil invested heavily in advertising — to consumers and doctors alike —  and also in large sales discounts, stimulating consumption.

Current procedure. Since 2001, only purchases of medicines containing more than 10 milligrams of zolpidem per tablet have required the presentation of a type of prescription only issued by a doctor authorized by health surveillance, and which cannot be digital. To purchase medicines with lower concentrations, the prescription can be issued by any doctor, including digitally.

How it will be. Anvisa extended the strictest requirements to all medicines containing zolpidem, regardless of quantity. According to the agency, looser criteria for lower concentrations are not scientifically justified.

Markets

State-controlled oil giant Petrobras last week announced the firing of its CEO, Jean Paul Prates, who had been locked in a feud with the government’s mines and energy minister and chief of staff. Petrobras share prices dropped by almost 6 percent the day after the announcement, amid fears of government interference in the firm. Magda Chambriard was selected to take Mr. Prates’s place as CEO, and is expected to be even more aligned with the Lula administration.

Chart of the week: Literate Brazilians

Newly released data from the 2022 Census showed a significant drop in Brazil’s illiteracy rate: from 9.6 percent of people over 15 years old in 2010, to 7 percent in 2022. Indeed, since the start of the century, Brazil’s illiteracy rate has nearly halved.

There were some worryingly persistent trends in the data however, released by the Brazilian Institute of Geography and Statistics (IBGE). The white population continues to have an illiteracy rate two times lower than the black population — and three times lower than that of indigenous Brazilians.

Stories we’re following

Water levels are beginning to recede in and around Porto Alegre, the capital of Rio Grande do Sul state, which has been suffering the impacts of catastrophic floods. It is expected that the human and material damage of the disaster will be better calculated this week. 

In case you missed it

Lula returned to Rio Grande do Sul to announce a series of federal aid measures for those affected by catastrophic floods that hit the state earlier this month. The main goal of the federal plan is to buy new homes for low-income families that have been displaced.

The Central Bank released the minutes from its latest policy meeting, during which it decided to slow the pace of cuts to the country’s benchmark interest rate. The document sought to dispel fears about an ideological divide within the monetary policy committee.

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