## Transcript of podcast with Paraguay’s Lea Giménez Duarte: “Transparency Pay Off” (April 26, 2018)

## Source details

**Canonical URL:** [Transcript of podcast with Paraguay’s Lea Giménez Duarte: “Transparency Pay Off” (April 26, 2018)](https://www.imf.org/-/media/files/news/podcasts/transcripts/2018/lea-gimenez-duarte-transcript-eng.pdf)

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### State of the economy
- Paraguay is "going through a very positive moment" economically despite a "40 percent decline in commodity prices."
- Reforms implemented starting in 2014/2015 aimed at strengthening fiscal management and transparency.

### Transparency reforms and fiscal consolidation
- Key reforms mentioned: the transparency law (approved 2014), the fiscal responsibility law, and the PPP law (public-private partnerships).
- Opening public finances to scrutiny revealed excess ("fat") in the budget, enabling cuts and fiscal reallocation.
- Timeline and effects:
  - Transparency law approved in 2014; impacts began to show in 2015/16.
  - Turnaround in fiscal management observed after "three or four years" of implementation.

### Social programs and redistribution
- Redirected resources led to major expansion of social programs:
  - Coverage increased by about 200 percent.
  - Size increased by about 250 percent.
- Result: larger support to a greater number of vulnerable people.

### Economic diversification and infrastructure
- Structural shift in sectoral contribution to GDP growth:
  - Period 2008 to 2012: agricultural sector contribution about 35 percent.
  - Period 2013 to 2017: agricultural sector contribution declined to 19 percent.
- New engines of growth include construction and infrastructure.
- Paraguay faces a "very large infrastructural gap"; PPPs are presented as necessary because "we will never have enough resources in the public sector alone" to finance needed infrastructure.
- Infrastructure investment is framed as a job generator.

### Political costs, public trust, and transition dynamics
- Transparency had high political costs: opening the "box" exposed excesses and provoked public upset.
- Restoring trust is an ongoing process; transparency "doesn’t happen overnight."
- Political durability:
  - During the electoral cycle, major candidates continued to emphasize transparency and fighting corruption; none proposed eliminating transparency.
  - Conclusion: "Once it’s out there, I think it’s there for good."
- Operational challenge: turning fiscal policy is compared to steering "a very large ship"—slow to change direction.

### Social anecdote illustrating transparency effects
- Publication of public employee pay and benefits led to social consequences, including a rise in divorce rates, because spouses were unaware of the extent of public workers’ benefits.

### Role of the IMF and international community
- The IMF can play a key role by:
  - "Intruding" into governance and anti-corruption matters to provide oversight, indicators, and monitoring linked to macro stability.
  - Supporting the strengthening of micro foundations that underpin macro fundamentals.
- Rationale: "Corruption has a way to hide in small, dark, little spots and spread around very quickly," so early detection and monitoring are critical.

*Transcript of podcast with Paraguay’s Lea Giménez Duarte: “Transparency Pay Off” (April 26, 2018).*

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_Source: https://www.imf.org/-/media/files/news/podcasts/transcripts/2018/lea-gimenez-duarte-transcript-eng.pdf_