The International Monetary Fund praised Paraguay’s progress and announced that it will release roughly US $117 million to the country after a repeat successful review of its current reform programmes. The IMF said this move marks the “successful completion of a comprehensive, independently‑designed reform agenda”.
According to the IMF, Paraguay’s economy remains resilient despite global uncertainties. Real GDP growth is expected to stay strong in 2026 and beyond, thanks to macro‑economic stability and a wide range of ongoing reforms. Inflation is under control and should reach the central bank’s 3.5 % target in 2026. While the current account may weaken temporarily due to imports linked to foreign direct investment, it is expected to improve in the medium term as new exports expand. Foreign‑exchange reserves remain comfortably above the required thresholds, and the IMF described the risk profile as balanced.
The IMF stresses that completing the fiscal consolidation plan is still essential for maintaining macro‑economic stability. Paraguay’s authorities have made steady progress in lowering the budget deficit to 1.5 % of GDP by 2026 and are on track with that goal. Continuous efforts to boost tax revenue, improve government efficiency, and safeguard the public pension system should create room for development priorities while supporting fiscal consolidation.
Since a little over two years ago, President Santiago Pena’s government has been implementing a pro‑market reform package that has faced strong protests from the public. The programme focuses on stable fiscal policy, reduced government spending, and positioning Paraguay as an investment destination.
Reforms to the pension system-most notably allowing accumulated savings to be invested in bonds and other financial instruments-have generated significant backlash. Social groups and the opposition call for protests both against the reforms themselves and against perceived corruption and social inequality.
Paraguay is part of Mercosur alongside Argentina, Brazil, and Uruguay. Recently the EU signed a decade‑old free‑trade agreement with the bloc, but it has not yet entered into force. There are concerns both within Paraguay and in the EU about the implications of this agreement.
