IMF Mission and Paraguay Reach Agreement in Principle on a New Economic Program

Press Release No. 06/60
March 21, 2006

The following statement was released in Washington, D.C., today by Mr. Alejandro Santos, the International Monetary Fund's (IMF) mission chief for Paraguay:

"A staff mission from the International Monetary Fund visited Asuncion from February 23 to March 9, to continue negotiations on a successor arrangement with Paraguay. Discussions continued after the departure of the mission, and I am pleased to announce that the mission has reached an agreement in principle on all aspects of a comprehensive program for 2006-08. The program will be submitted for review to the IMF's Management shortly, and once approved, will be presented to the IMF's Executive Board for its consideration, which could take place in early May.

"The mission, which included the presence of Mr. José Fajgenbaum, Deputy Director of the IMF's Western Hemisphere Department, engaged in comprehensive discussions with the Paraguayan authorities in defining the main elements of an economic program to consolidate macroeconomic stability, promote growth, and reduce poverty that could be supported by a new Stand-By Arrangement (SBA) with the IMF.

"The authorities' program is geared at entrenching economic stability, further reducing vulnerabilities in the economy, and creating the conditions for sustained growth and poverty reduction. The program will be based on five policy pillars: (i) a strong macroeconomic program; (ii) public sector reform; (iii) financial sector reform; (iv) a pro-growth reform agenda; and
(v) a social safety net. As mentioned earlier, this agreement is subject to approval by the Management and Executive Board of the IMF.

"Finally, I would like to encourage the public to read all Fund documents on Paraguay at the IMF web site: http://www.imf.org/external/country/pry/index.htm."



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