Press Release: Statement by an IMF Staff Mission to Paraguay

June 4, 2008

Press Release No. 08/132

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

"An IMF mission visited Asunción during May 21 to June 4 for discussions in the context of the sixth and final review under the Stand-By Arrangement (SBA), approved by the IMF Executive Board in May 2006. The mission met with Central Bank President Germán Rojas, Finance Minister Miguel Gómez, other members of the Economic and Social Cabinet, the private sector, the donor community as well as members of the transition team, including Vice President-elect Federico Franco, and Finance Minister-designate Dionisio Borda.

"Performance under the current SBA continues to be strong. After a record growth rate of 6¾ percent in 2007, the economy is expected to grow vigorously by at least 5 percent in 2008. Core inflation has increased to 12½ percent in May, driven mainly by higher food and energy prices, but is expected to return within the authorities' inflation target range (2½ to 7½ percent) by the end of the year as monetary conditions tighten. The fiscal position remains strong with good revenue performance and continued strict control over expenditures. The balance of payments has been strong and reserves rose to over US$3 billion at end-May 2008. With these positive results, the main objectives of the authorities' program are being achieved.

"All quantitative performance criteria established for end-March 2008 under the IMF-supported program were met, and the authorities expect that quantitative targets for end-June 2008 will also be observed. Progress continues toward observing structural benchmarks for the second quarter of 2008, and we agreed on policies to ensure their completion over the next few weeks. The mission will then send their findings to the IMF's Board of Executive Directors.

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


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