Chamber approves use of Social Fund to finance debt settlement for rural producers

BRASILIA - The Chamber of Deputies approved on Wednesday night, the 16th, by a vote of 346 to 93, a bill authorizing the use of the Social Fund as a source of funding for a special financing line intended to settle rural producers' debts. The measure includes rural credit operations, non-rural debts arising from loans used to repay rural credit operations, and Rural Product Notes (CPR) of producers affected two or more times between 2020 and 2025 by climate events.

According to the opinion of the rapporteur, Afonso Hamm (PP-RS), the credit line has a global ceiling of R$30 billion, with individual limits of R$10 million per producer and R$50 million per cooperative or condominium.

The bill sets interest rates of 3.5% for the National Program to Strengthen Family Farming (Pronaf) , 5.5% for the National Program to Support Medium-Sized Rural Producers (Pronamp), and 7.5% for the others. According to the text, there is a 10-year term, with a 3-year grace period, and a 15-year grace period in "extraordinary cases."

The refinanced amounts will be "gradually reintegrated" into the Social Fund as beneficiaries make their payments, according to the rapporteur. Furthermore, Hamm emphasizes that the use of Social Fund resources constitutes a financial expense, "therefore not imposing additional pressure on the primary expenditures of the New Fiscal Framework nor compromising the results targets established in the Budget Guidelines Law for 2025."

The Social Fund was created in 2010 with the goal of transforming revenue from oil and gas exploration into resources for social and regional development. The bill also authorizes the Constitutional Funds to allocate resources for financing in their areas of operation.

How credit works in practice

Find out more details about the approved project:

• Allows use of the Social Fund - The law authorizes the use of current revenues from 2025 and 2026, as well as the financial surplus of the Social Fund recorded on December 31 of 2024 and 2025, as a source of resources for the provision of the credit line;
• Includes debts from installments contracted up to June - The renegotiation affects debts related to overdue or upcoming installments of rural credit operations, renegotiated or not, contracted up to June 30, 2025;
• Includes loans - The project also covers debts related to loans of any nature, whether due or falling due, renegotiated or not, whose resources have been or will be used up to six months after the publication of the law, for the amortization or settlement of rural credit operations or Rural Product Certificates formalized up to June 30, 2025;
• Includes debts related to Rural Product Certificates - The project even includes matured or maturing certificates, renegotiated or not, issued up to June 30, 2025 in favor of financial institutions, production cooperatives, input suppliers or production buyers, provided they are registered or deposited with an entity authorized by the Central Bank to carry out the activity of registration or centralized deposit of financial assets or securities;
• Different rule for investment operations - In the three previous cases, when the debts refer to investment operations, the project reaches due or falling due installments only until December 31, 2027;
• Beneficiaries from the Northeast with a longer period - The beneficiaries of the financing are rural producers, their associations, cooperatives and condominiums from States that have declared a public calamity or emergency between 2020 and 2025, in which the debts add up to 10% more than the municipality's rural credit portfolio, have lost twice 20% of the average municipal income and 30% of production; in the case of beneficiaries from the Northeast, the period of calamity may be from 2012 to 2025;
• Suspension of registration in negative credit records - The project suspends the due date, administrative charges, extrajudicial, judicial and tax executions, registration in negative credit records, and the respective procedural deadlines, relating to the rural credit installments covered by the project.