The Brazilian government is evaluating new alternatives as it looks to ease the financial problems faced by slaughterhouses. Two measures are being assessed, which would provide additional working capital to the sector. Both involve the use of up to R$800 million in accumulated tax credits owed to companies producing for export.
One alternative would see the government pay slaughterhouses in cash for tax credits – a move which would provide extra liquidity to cash-strapped companies. Receipt of these funds would be linked to guarantees that slaughterhouses would pay their debts to ranchers and meat workers.
Another option would be to use these tax credits as a form of collateral against new bank loans to the sector. In this case however, there may be legal obstacles to financing companies that have filed for judicial recovery.