IMF Staff Country Reports

Paraguay: 2024 Article IV Consultation, Third Review Under the Policy Coordination Instrument, Modification of Targets, and First Review Under the Arrangement Under the Resilience and Sustainability Facility-Press Release; and Staff Report

July 1, 2024

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International Monetary Fund. Western Hemisphere Dept. "Paraguay: 2024 Article IV Consultation, Third Review Under the Policy Coordination Instrument, Modification of Targets, and First Review Under the Arrangement Under the Resilience and Sustainability Facility-Press Release; and Staff Report", IMF Staff Country Reports 2024, 200 (2024), accessed December 26, 2024, https://doi.org/10.5089/9798400280030.002

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Also available in: español

Summary

This paper presents Paraguay’s 2024 Article IV Consultation, Third Review under the Policy Coordination Instrument (PCI), Modification of Targets, and First Review under the Arrangement under the Resilience and Sustainability Facility (RSF). The PCI underpins Paraguay's economic strategy and structural objectives of maintaining macroeconomic stability and promoting social welfare and inclusion. The PCI is yielding positive results, though two targets were missed due to the identification of additional unrecorded healthcare-related expenditure. Three reform targets have been met. The new government is committed to continuing reforms guided by the PCI and RSF arrangements. It is crucial for Paraguay to rebuild fiscal buffers, ensure the sustainability of the public servants’ pension fund and enhance supervision of public enterprises to limit contingent risks. Taking decisive action against corruption to minimize reputational risks, reducing informality, and increasing international market integration will make Paraguay a significantly more attractive investment destination, including for green projects. Adaptation and mitigation measures should reduce the country"’s vulnerability to climate change and preserve its substantial natural assets and clean energy matrix.

Subject: Basel Core Principles, Credit, Exchange rate arrangements, Expenditure, Financial regulation and supervision, Foreign exchange, Money, Public debt, Public investment spending

Keywords: B. government policy, Basel Core Principles, Climate change adaptation, Credit, E. World Bank engagement, Exchange rate arrangements, Global, IMF's holding, Paraguay's effort, Public investment spending

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