Actualidad Paraguay

Recapitalizing family-run subsistence farming

Act 5908/17

Act 5908/17 was passed on 16th October, to recapitalize family-run subsistence farms; a category that includes all farming activities – agriculture, stock-breeding, silviculture, fishing, fish-farming and grazing – that are run and operated solely by families. Thus, the regulation allows for debts due up to 30 June 2017 to be restructured, provided they have been taken on for farming production and productive investments.The most important matters regulated in the text are as follows:

Nature of the restructuring:

  • Maximum sum: for diverse activities not specified by each producer, a sum of up to 25 MMW (minimum monthly wage) can be restructured
  • Debt reduction: on new defaults of up to 10 years, including 2 years’ grace period and annual interest rates of 8%
  • Loan classification: the loan granted under this law will be have preferential status

Requirements that must be met:

  • These debts may not already benefit from the 5527/15 Financial Rehabilitation for small producers, financial literacy and protection against unfair or misleading loan practices Act
  • The beneficiary must be registered on the Ministry of Agriculture & Stockbreeding’s (MAG) National Beneficiaries Register (RENABE)
  • Properties may not be larger than 30 hectares

Other considerations:

  • On an exceptional basis, family-run farm smallholders with unpaid debts, whether these are with private or public institutions, may receive new loans from the CAH agricultural loans facility, provided they are used for productive recapitalization
  • Article 3 of the 5527/15 Act referenced above has been amended. The conditions required to date to access loans regulated by this law have been eliminated, leaving only two:
    • Requirement to attend financial and production education courses offered under the law
    • The sum of the loan should be calculated on the basis of each production unit and should not go above the sum established under law, nor exceed the basic needs of the family unit benefiting from it

In view of the implications of the law, the regulations for which are scheduled to be ready within 2 months, the final clauses authorize the amendments to the national budget for the 2016 tax period.