The International Monetary Fund (IMF) Executive Board has completed its fifth review under the Policy Coordination Instrument (PCI) and the third review under the Resilience and Sustainability Facility (RSF) for Paraguay. This completion grants Paraguayan authorities access to approximately US$ 285 million, of which they have requested US$ 195 million.
Paraguay's economy has shown resilience with a real GDP growth of 4.2% in 2024, driven by private consumption and capital formation, despite a negative impact from net exports due to lower electricity production. The economic momentum continued into early 2025, with an expected GDP growth of 3.8%. Inflation remains within the central bank's tolerance range.
Fiscal consolidation is on track, with the fiscal deficit reduced to 2.6% of GDP in 2024 from 4.1% in 2023, aided by increased tax revenue. The deficit is projected to further decline to 1.9% in 2025. However, the current account deficit widened to 3.7% of GDP in 2024 due to decreased export revenues linked to lower soybean prices and reduced hydroelectricity exports.
Mr. Nigel Clarke, Deputy Managing Director and Acting Chair, stated: "The Paraguayan economy remains resilient, owing to its strong macroeconomic fundamentals and the authorities’ continued prudent macroeconomic management." He emphasized that while the outlook is favorable, it is subject to global risks and weather shocks.
Clarke noted that "With inflation contained within the central bank’s tolerance range, monetary policy should remain data-driven." He also highlighted plans for deepening capital markets and strengthening AML/CFT frameworks as essential steps forward.
He added that "The authorities remain resolute in advancing the fiscal consolidation plan," aiming for a deficit reduction to 1.5% of GDP by 2026 per the Fiscal Responsibility Law.
Addressing public employee pension fund sustainability is deemed crucial for mitigating medium-term fiscal risks. Clarke affirmed that policy reforms under PCI and RSF are enhancing macroeconomic stability and resilience.