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At the beginning of the pandemic, we detailed the measures taken by the government and the monetary authority to guarantee access to credit. The figures released so far show that these measures worked during the second quarter and the first few months of the third quarter.

According to Central Bank, The balance of credit for legal entities grew by 16.7% in the comparison between August 2020 and the same month of the previous year. Analyzing the data by company size, we see an increase of 14.8% for large companies and 20% for small companies. averages, small e micro-enterprises, Also in the comparison between August 2020 and the same month of the previous year.

Getting credit to small businesses was a global concern and the government took measures such as creating credit lines like the PRONAMPE. The data shows that the measures have met part of the demand from these companies and also shows that the efforts have had some effect.

For individuals, the credit balance grew by 8.8%, in the comparison between August 2020 and the same month of the previous year, despite the retraction in the credit card and overdraft modalities. Also noteworthy was an increase in loans for renegotiation purposes.

Data from other economies also shows a recovery in credit indicators. According to the Bank of England, in July 2020, loans exceeded repayments for the first time after four months, although they still remain below the pre-crisis average. In the United States FED - American Central Bank - reported an increase in non-revolving credit, also for July 2020.

Reflecting the fall in the SELIC, At the end of the year, interest rates fell. In August 2020, the average rate for individuals was 24% compared to 41.2% at the end of 2016. We observed the same behavior in the average interest rate charged to companies, which went from 17.5% per year at the height of the 2015-2016 crisis to 11% in August 2020.

Data from default also showed a decline in recent months, after an advance between April and May, with the immediate impact of the pandemic. According to the Central Bank, the default rate for companies was 1.8% in August 2020, after reaching 2.3% in May. The default rate for individuals was 3.3%, after reaching 4% in April.

So far, the measures have somewhat mitigated the impact of the crisis on businesses and families. However, some figures signal the need for caution. In the case of defaults, the Central Bank's data reflects the initiatives to encourage debt renegotiation and only considers bank debts. Looking at the overall picture of delinquency, according to data from the credit bureau sector, the number of people in default was close to 64 million at the start of the pandemic, an all-time high. From now on, this figure will deserve a lot of attention, as the space for renegotiation and emergency credit is close to running out. Each economic sector will have a different recovery process and will start to operate under new business dynamics.

Once the journey is complete, the challenge will be to minimize the risks of a debt crisis, both in the public and private sectors. The more vigorous the economic recovery, and the sooner the solution to the health problem comes, the greater the chances of success.

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By: Elias Sfeir President of ANBC & Member of the Climate Council of the City of São Paulo & Certified Advisor