Paraguay: Request for Stand-By Arrangement—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Paraguay

IMF Staff Country Reports, August 14, 2006

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Paraguay: Request for Stand-By Arrangement—Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Paraguay

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Bibliographic details

• Published: August 14, 2006
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781451832518.002

Executive summary

• The authorities’ program for 2003–05, supported by the previous Stand-By Arrangement (SBA), successfully stabilized the economy despite difficult conditions.
• A new economic program for 2006–08 is needed to:
  • consolidate macroeconomic stability,
  • address remaining vulnerabilities, and
  • create the conditions for higher growth.
• In the context of a benign environment, inflation fell significantly to 2¾ percent in 2004—the lowest inflation rate since the early 1970s.
• The return of capital flight in 2004 satisfied increases in the demand for money and generated a rapid growth of monetary aggregates.

Macroeconomic stabilization and vulnerabilities

• 2003–05 program outcomes:
  • Stabilization achieved under the previous SBA.
  • Difficult external and/or domestic conditions are noted as context for stabilization.
• Rationale for a new program (2006–08):
  • Consolidation of achieved macroeconomic stability.
  • Need to address remaining vulnerabilities that the prior program did not fully eliminate.
  • Objective to create conditions for higher growth.

Inflation, money demand, and monetary aggregates

• Inflation:
  • Fell to 2¾ percent in 2004.
  • This rate is identified as the lowest since the early 1970s.
• Money and capital flows:
  • The return of capital flight in 2004 satisfied increases in the demand for money.
  • This process generated a rapid growth of monetary aggregates.

Thematic coverage (as listed)

• Subjects: Banking, Currencies, Economic sectors, External debt, Inflation, Money, Prices, Public debt, Public sector
• Keywords: authority, Caribbean, CR, Currencies, government arrears, government of Paraguay, government reform agenda, Inflation, ISCR, monetary authorities, monetary policy, prudent fiscal policy, Public sector, reform agenda, SDR, supportive monetary policy

Content in this bundle

• _cr06302 - Executive Summary
  • _cr06302 - Executive Summary (Markdown version)
  • _cr06302 - Executive Summary (PDF)