Household financial vulnerability rises in 22 Brazilian states
Flávio Ataliba: “The problem for families today isn’t so much taking on new debt as it is being able to pay off the debt they already have”
Cris Vicente/Divulgação
Household financial vulnerability worsened slightly in Brazil in the second quarter of 2026, rising an average of 1.01%, with deterioration recorded in 22 states, according to the Financial Vulnerability Index compiled by the Center for Development Studies of the Northeast at the Getulio Vargas Foundation’s Brazilian Institute of Economics (FGV Ibre). Mato Grosso posted the greatest improvement, while the Federal District recorded the sharpest deterioration.
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The quarterly index measures households’ exposure to financial stress and their ability to withstand shocks. In this first quarterly edition, researchers used data from Brazil’s Central Bank and the country’s continuous household survey to compare the first and second quarters of 2026.
The Financial Vulnerability Index covers six dimensions. Loan delinquencies carry a 25% weight, while debt relative to income, short-term payment pressure, borrowing costs, ability to absorb shocks, and labor-market vulnerability each account for 15%.
The index shows that a state may have a relatively high level of financial vulnerability while still improving. Conversely, another may remain among the least vulnerable while showing signs of deterioration. Researchers say a state’s position in the ranking and the direction its indicator is moving provide different but complementary pictures.
Overall, loan delinquencies drove the deterioration, accounting for 77% of the increase in the national average, and it worsened in 23 of Brazil’s 27 federative units. A second factor was short-term payment pressure, which measures how much of the outstanding credit portfolio comes due within 90 days and accounted for 32% of the increase. The index’s performance varied across states.
“The problem for households today is not so much taking on new debt as being able to pay the debt they already have,” said economist Flávio Ataliba, one of the researchers responsible for the index.
Mato Grosso was the main positive standout, recording the largest improvement in financial vulnerability in the country, with a 2.53% decline. The state moved from fourth to 10th place in the ranking of the most vulnerable states.
Ataliba said the improvement was driven by relative indebtedness, which measures household debt relative to the income families in the state generate. Loan delinquencies were virtually unchanged, although that is the dimension where the risk of a reversal is greatest.
“The result reflects the vulnerability profile typical of agricultural economies,” Ataliba said. “In Mato Grosso, the problem isn’t expensive credit or a weak labor market, since both borrowing costs and labor-market conditions are among the best in the country. The vulnerability lies in debt relative to income, and that is precisely where the state improved. Even after the decline, however, relative indebtedness remains the highest in Brazil.”
According to Ataliba, states with strong agricultural activity tend to have higher loan delinquency rates. In July, the delinquency rate on rural credit reached a record 8.8%. In Northeastern states and Rio de Janeiro, he said, financial vulnerability is more closely linked to the cost of borrowing—including credit cards, overdraft facilities, and personal loans—and to labor-market weakness.
Another notable case is the Federal District. Despite posting the largest increase in the index during the period, at 5.89%, it remained near the bottom of the vulnerability ranking because it started from a low level of financial vulnerability.
Ataliba said the deterioration there came from three dimensions: debt relative to income, labor-market vulnerability, and the ability to absorb shocks. Together, they accounted for 80% of the increase.
“High and stable incomes, largely associated with public-sector employment, give the Federal District the country’s lowest delinquency rate and strongest labor market. But the simultaneous deterioration in the labor market and the savings cushion—the ability to absorb shocks—deserves attention, precisely because those are the factors underpinning that resilience,” he said. “It’s a signal to watch, not an alarm.”
Ataliba noted two methodological caveats. First, the Federal District starts from very low levels, meaning that small changes in absolute terms can produce large percentage swings. In addition, its savings data required specific statistical treatment because of atypical values.
Maranhão has the highest level of financial vulnerability in the country and recorded a further 2.26% increase between the two quarters, with the deterioration concentrated in loan delinquencies and households’ effective ability to make payments. Tocantins, up 0.66%, and Rondônia, up 0.17%, also remained among the most vulnerable states.
Santa Catarina, down 1.70%, and Rio Grande do Sul, down 1.09%, recorded improvements driven by a reduction in short-term obligations. Ataliba said Paraíba, where vulnerability fell 1.04%, also improved, but more balanced than Mato Grosso, with declines in loan delinquencies, indebtedness and labor-market vulnerability.
Ataliba said the national index is likely to improve over the coming quarters, driven by lower interest rates and the effects of Desenrola, the federal government’s debt renegotiation program, whose third edition has just been announced. An economic slowdown, however, could weaken the labor market, where households generate their income, and reduce their ability to make payments.
“I think the main message for public policy is that there is no one-size-fits-all solution. In agricultural states, the agenda involves risk management and renegotiating rural credit. In the Northeast, it involves financial education, replacing expensive debt with cheaper credit, and protecting the incomes of informal workers,” Ataliba said.
