Press Release No. 07/284

Press Release: Statement by an IMF Staff Mission to Paraguay

December 12, 2007

Mr. Alejandro Santos, chief of an International Monetary Fund (IMF) mission to Paraguay, issued the following statement today in Asunción:

"A mission from the International Monetary Fund (IMF) visited Asunción during November 28 to December 12 for discussions in the context of the fifth review under the Stand-By Arrangement (SBA), approved by the IMF Executive Board in May 2006. The mission was headed by Mr. Alejandro Santos and met with the Central Bank President German Rojas, Finance Minister Cesar Barreto, other members of the Economic and Social Cabinet, and representatives of the private sector.

"Favorable recent developments suggest that the broad macroeconomic objectives of the 2007 authorities' program will be achieved. All quantitative performance criteria established for end-September 2006 under the IMF-supported program were met, and the expectation is that quantitative targets for end-December 2007 will also be observed. Economic growth has been vigorous and is likely to reach at least 6 percent, exceeding the program objective of 4 percent for 2007. Inflation has been volatile over the past four months, mainly on account of fluctuations in food prices, but core inflation is likely to end up within the authorities' inflation target. On the structural side, there was progress in all areas, except for one structural measure (the draft payment system law).

"Discussions have been productive, and key elements of the authorities' economic program for 2008 have been agreed. The mission expects to conduct the final assessment of the fifth review in Washington in the coming weeks before sending their findings to the IMF's Board of Executive Directors. Following the recent approval of the 2008 budget, the authorities and Fund staff will finish specifying the remaining elements of the economic program and the structural agenda for 2008.

"The mission would like to thank the authorities and the citizens of Paraguay for their warm hospitality."