The International Monetary Fund praised Paraguay for its progress and announced the release of another roughly US$117 million. The amount comes after repeat successful reviews of the country’s reform programmes, which the IMF described as the “successful completion of a comprehensive, independently devised reform agenda”.
According to the IMF, Paraguay’s economy remains resilient amid global uncertainties. Real GDP is expected to grow strongly in 2026 and beyond, thanks to macro‑economic stability and a range of ongoing reforms. Inflation appears under control and is forecast to reach the central bank’s 3.5 percent target in 2026. The country’s current account is likely to weaken in the short term because of imports related to foreign‑direct investment, but it should strengthen over the medium term as new exports rise. Foreign‑exchange reserves stay above the required thresholds, and the IMF rates the risks as balanced.
The IMF stresses that completing the fiscal consolidation plan is essential for maintaining macro‑economic stability. Paraguay has made steady progress in cutting the budget deficit to 1.5 percent of GDP by 2026 and remains committed to that goal. Continuous efforts to broaden tax revenues, improve government efficiency, and secure the sustainability of the public pension system should create room for development priorities while supporting fiscal consolidation objectives.
President Santiago Peña’s administration has been pushing a pro‑market reform package for a little over two years, often amid strong public protests. The economist particularly focuses on a stable fiscal policy, lower government spending, and positioning Paraguay as an investment destination.
Reforms to the pension system, which now allow savers to invest their accumulated funds in bonds and other financial instruments-a change the IMF had urged-have provoked significant controversy. Social groups and the opposition repeatedly call for protests, not only against the specific reform but also against widespread corruption and social inequality.
Paraguay is one of the Mercosur member states-along with Argentina, Brazil, and Uruguay-that recently signed a long‑deliberated free‑trade agreement with the European Union, although it is not yet in force. The agreement has raised concerns both in the EU and in Paraguay.