- On June 27, 2025, the IMF Executive Board concluded the fifth review under the Policy Coordination Instrument (PCI) and the third review under the Resilience and Sustainability Facility (RSF) arrangement.
- The Paraguayan economy remains robust underpinned by buoyant domestic demand. Staying the course with the fiscal consolidation plan and structural reforms will be critical to preserve macroeconomic stability.
- Program performance under the PCI and RSF remains very satisfactory, underpinned by a strong commitment to pursue prudent macroeconomic policies and structural reforms to enhance the country's prospects for long-term sustainable and inclusive growth.
Washington, DC: The Executive Board of the International Monetary Fund (IMF) today completed the fifth review under the PCI arrangement and the third review under the RSF arrangement. The completion of the reviews provides the authorities with access to approximately US$ 285 million (SDR 211.46 million) under the RSF, of which the authorities have requested disbursement of US$ 195 million (SDR 146 million).
The Paraguayan economy remains resilient, with real GDP growing 4.2 percent in 2024. Buoyant private consumption and gross fixed capital formation outweighed a negative contribution from net exports owing mainly to lower electricity production and exports. Economic activity continued its strong momentum in early 2025 with real GDP expected to expand 3.8 percent this year. Headline inflation remains contained within the central bank's tolerance range.
Fiscal consolidation is progressing, with the fiscal deficit falling to 2.6 percent of GDP in 2024, down from 4.1 percent in 2023, supported by a substantial increase in tax revenue. The fiscal deficit is projected to decline further to 1.9 percent of GDP in 2025. The current account deficit widened to 3.7 percent of GDP in 2024, from 0.4 percent in 2023, primarily due to lower export revenues, driven in large part by lower soybean prices and a drop in hydroelectricity exports because of low river water levels. Foreign reserves remain comfortably above standard adequacy metrics.
At the conclusion of the Executive Board's discussion, Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair, made the following statement:
"The Paraguayan economy remains resilient, owing to its strong macroeconomic fundamentals and the authorities' continued prudent macroeconomic management. The outlook is favorable, with growth expected to remain robust, but is subject to elevated global risks and to adverse weather shocks. Against this backdrop, staying the course with prudent macroeconomic management continues to serve as a cornerstone of macroeconomic stability.
"With inflation contained within the central bank's tolerance range, monetary policy should remain data driven. The exchange rate should continue to serve as a shock absorber. The banking sector is well capitalized, liquid, and profitable, and the authorities plan to deepen and modernize capital markets. Further strengthening AML/CFT frameworks, including by promptly finalizing the National Risk Assessment, is essential.
"The authorities remain resolute in advancing the fiscal consolidation plan, aiming to reduce the deficit to 1.5 percent of GDP by 2026—the ceiling established by the Fiscal Responsibility Law. Efforts to bolster tax revenues and improve the efficiency of public expenditure should continue to support fiscal consolidation goals.
"Addressing the sustainability of the public employees' pension fund is essential to mitigate medium-term fiscal risks. The overall risk of sovereign stress is low, and ongoing efforts to gradually decrease the proportion of debt denominated in foreign currency would help further strengthen the risk profile of public debt.
"Policy reforms under the Policy Coordination Instrument and the Resilience and Sustainability Facility are further strengthening macroeconomic stability and resilience. Sustained progress on the reform agenda—including continuing efforts to reduce informality, strengthen governance and anti-corruption frameworks, and enhance resilience to natural disasters—will further improve the business environment, boost Paraguay's appeal as an investment destination, and reinforce macroeconomic stability."
