{
  "title": "Press Release: IMF Approves 15-Month US$73 Million Stand-By Arrangement for Paraguay",
  "publication": "IMF News, December 15, 2003",
  "sourceUrl": "https://www.imf.org/en/news/articles/2015/09/14/01/49/pr03218",
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  "summary": "The Executive Board approved a 15-month SDR 50 million (about US$73 million) Stand-By Arrangement for Paraguay.",
  "publishDate": "2003-12-15",
  "sections": [
    {
      "heading": "Approval and financing",
      "content": "- The Executive Board approved a 15-month SDR 50 million (about US$73 million) Stand-By Arrangement for Paraguay.\n- Immediate release: SDR 30 million (about US$44 million).\n- The authorities indicated their intention to treat the arrangement as precautionary."
    },
    {
      "heading": "Executive Board statement (Shigemitsu Sugisaki, Deputy Managing Director and Acting Chairman)",
      "content": "- Program purpose:\n  - Stabilize the economy.\n  - Begin structural reform to raise growth, reduce poverty, and improve governance.\n  - Improve efficiency and transparency of government operations.\n- Fiscal agenda commitments:\n  - Eliminate the fiscal deficit in 2004.\n  - Undertake lasting reform of public sector institutions.\n  - Restructure and reduce debt and clear all payment arrears.\n- Revenue measures to be implemented:\n  - Increase key excise tax rates.\n  - Broaden the base of the value-added tax and the income tax.\n  - Implement a new vehicles tax.\n  - Strengthen tax and customs administration.\n- Expenditure and public sector measures:\n  - Spending austerity and redirect spending to social sectors and public investment.\n  - Reform the public employees' pension plan.\n  - Contain losses of public enterprises through efficiency enhancement and adequate pricing policy for fuel and utilities.\n  - Implement the recently approved Public Procurement Law and undertake external audits of public institutions.\n- Creditor and institutional reforms:\n  - Normalize relations with external and domestic creditors.\n  - Prepare reforms of the civil service, the social security system, and public enterprises.\n- Monetary and financial sector measures:\n  - Monetary policy geared to controlling inflation and allowing a freely floating exchange rate.\n  - Central bank institutional reforms to improve independent monetary policy.\n  - Restructure public banks; strengthen bank resolution framework, regulation and supervision of financial entities (including cooperatives); require independent credit ratings of banks.\n- Expected outcome with resolute implementation:\n  - Greater economic stability and more robust growth.\n  - Contribution to reducing poverty and addressing social challenges."
    },
    {
      "heading": "Recent economic developments (2002–2003)",
      "content": "- 2002 recession drivers:\n  - Regional crisis, poor harvest, and lack of political consensus to implement reforms.\n- 2002 outcomes:\n  - Real GDP fell by nearly 2½ percent.\n  - Inflation accelerated from 8½ percent to 14½ percent.\n  - The guaraní lost 34 percent of its value relative to the U.S. dollar.\n  - Accumulation of large payment arrears, including to some multilateral institutions, and default on some domestic bonds.\n  - Open unemployment rose from 7.6 percent in 2000 to 10.8 percent in 2002.\n- 2003 developments:\n  - Projected real GDP increase of around 2 percent for the year (driven by a good harvest, improved regional situation, and first steps of the authorities' program).\n  - Annual inflation below 10 percent in October 2003, down from the peak of 21 percent in April 2003.\n  - Significant remaining imbalances: large financing gaps in the public sector and a recovering banking system leave the economy vulnerable to shocks."
    },
    {
      "heading": "Program summary: objectives, projections, and measures",
      "content": "- Program objectives:\n  - Create conditions for sustained economic growth and poverty reduction.\n  - Address governance problems by improving efficiency and transparency of government operations.\n  - Stabilize fiscal situation and initiate structural reforms in the public sector and banking system.\n- Macroeconomic projections:\n  - Growth projected to rise to around 2½ percent in 2004 and climb to around 3½ percent in the medium term.\n  - Underlying inflation projected to fall from 9 percent in 2003 to 6½ percent in 2004.\n  - The current account would remain broadly in surplus.\n- Fiscal policy and debt dynamics:\n  - Fiscal package intended to close fiscal financing gap, pay off arrears, and place public debt on a more sustainable path.\n  - Fiscal adjustment measures already implemented will produce an improvement of at least 1½ percent of GDP on an annual basis.\n  - Measures to be implemented during the program would yield an additional 2-2½ percent of GDP annually.\n  - Adjustment expected to bring the overall balance into slight surplus and initiate a decline in the debt/GDP ratio toward around 30 percent of GDP by the end of the decade, while accommodating increased capital spending and social investment.\n  - Revenue strategy: raise revenues while minimizing increases in tax rates.\n- Monetary policy stance for 2004:\n  - Geared toward controlling inflation while maintaining exchange rate flexibility.\n  - Program establishes targets on net domestic assets to bring money supply growth down to a rate consistent with single-digit inflation in the medium term, while allowing recovery in private lending.\n  - Central bank to develop technical and statistical capabilities to move eventually to an inflation targeting regime.\n- Financial sector reforms:\n  - Enhance bank supervision and resolution capabilities.\n  - Pass legislation to introduce a deposit insurance system (already taken).\n  - Plan to reform public banks and modernize regulatory requirements for all financial institutions.\n- Structural reform agenda:\n  - Strengthen public sector efficiency and governance.\n  - Initiate public sector reform (public enterprises, central bank, social security institute) and enact a public banking law to improve the institutional environment for stability and growth."
    },
    {
      "heading": "Key statistics (selected figures from Table 1: Paraguay: Selected Economic Indicators, 1999-2004)",
      "content": "- GDP at current prices (annual percent change): 3.0 (1999), 11.5 (2000), 4.4 (2001), 13.7 (2002), 16.7 (2003), 9.3 (2004).\n- GDP at constant prices (annual percent change): 0.5 (1999), -0.4 (2000), 2.7 (2001), -2.3 (2002), 2.0 (2003), 2.4 (2004).\n- Consumption (annual percent change): -3.6 (1999), 0.8 (2000), 6.2 (2001), -5.1 (2002), 2.8 (2003), 1.5 (2004).\n- Investment (annual percent change): -3.8 (1999), -0.7 (2000), -17.5 (2001), -11.0 (2002), -4.6 (2003), 7.6 (2004).\n- Exports, f.o.b. (in millions of U.S. dollars): 2,307 (1999), 2,322 (2000), 1,876 (2001), 1,878 (2002), 2,102 (2003), 2,111 (2004).\n- Imports, c.i.f. (in millions of U.S. dollars): 2,750 (1999), 2,864 (2000), 2,495 (2001), 2,159 (2002), 2,339 (2003), 2,398 (2004).\n- Current account (in millions of U.S. dollars): -165 (1999), -163 (2000), -278 (2001), 92 (2002), 83 (2003), 26 (2004).\n- Central government primary balance (in percent of GDP): -2.8 (1999), -1.7 (2000), 1.0 (2001).\n- Consolidated public sector primary balance 1/ (in percent of GDP): -1.8 (1999), -2.6 (2000), -1.3 (2001), 1.2 (2002), 2.2 (2003).\n- Consolidated public sector overall balance 1/ (in percent of GDP): -3.2 (1999), -0.6 (2000), 0.3 (2001).\n- Public sector external debt (end-of-year, percent of GDP): 28.9 (1999), 30.6 (2000), 33.5 (2001), 42.9 (2002), 44.3 (2003), 40.5 (2004).\n- International reserves (in millions of U.S. dollars): 988 (1999), 772 (2000), 723 (2001), 641 (2002), 818 (2003), 855 (2004).\n- GDP (in billions of guaranies): 24,144 (1999), 26,921 (2000), 28,119 (2001), 31,977 (2002), 37,302 (2003), 40,779 (2004).\n\nInternational Monetary Fund press release, December 15, 2003.\n\n---\n\n\n References\n\n- Paraguay and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2015/09/14/01/49/pr03218"
    }
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    "Published: December 15, 2003",
    "The Executive Board approved a 15-month SDR 50 million (about US$73 million) Stand-By Arrangement for Paraguay.",
    "Immediate release: SDR 30 million (about US$44 million).",
    "The authorities indicated their intention to treat the arrangement as precautionary.",
    "Program purpose:",
    "Fiscal agenda commitments:",
    "Revenue measures to be implemented:",
    "Expenditure and public sector measures:",
    "Creditor and institutional reforms:",
    "Monetary and financial sector measures:",
    "Expected outcome with resolute implementation:",
    "2002 recession drivers:",
    "2002 outcomes:",
    "2003 developments:",
    "Program objectives:",
    "Macroeconomic projections:",
    "Fiscal policy and debt dynamics:",
    "Monetary policy stance for 2004:",
    "Financial sector reforms:",
    "Structural reform agenda:",
    "GDP at current prices (annual percent change): 3.0 (1999), 11.5 (2000), 4.4 (2001), 13.7 (2002), 16.7 (2003), 9.3 (2004).",
    "GDP at constant prices (annual percent change): 0.5 (1999), -0.4 (2000), 2.7 (2001), -2.3 (2002), 2.0 (2003), 2.4 (2004).",
    "Consumption (annual percent change): -3.6 (1999), 0.8 (2000), 6.2 (2001), -5.1 (2002), 2.8 (2003), 1.5 (2004).",
    "Investment (annual percent change): -3.8 (1999), -0.7 (2000), -17.5 (2001), -11.0 (2002), -4.6 (2003), 7.6 (2004).",
    "Exports, f.o.b. (in millions of U.S. dollars): 2,307 (1999), 2,322 (2000), 1,876 (2001), 1,878 (2002), 2,102 (2003), 2,111 (2004).",
    "Imports, c.i.f. (in millions of U.S. dollars): 2,750 (1999), 2,864 (2000), 2,495 (2001), 2,159 (2002), 2,339 (2003), 2,398 (2004).",
    "Current account (in millions of U.S. dollars): -165 (1999), -163 (2000), -278 (2001), 92 (2002), 83 (2003), 26 (2004).",
    "Central government primary balance (in percent of GDP): -2.8 (1999), -1.7 (2000), 1.0 (2001).",
    "Consolidated public sector primary balance 1/ (in percent of GDP): -1.8 (1999), -2.6 (2000), -1.3 (2001), 1.2 (2002), 2.2 (2003).",
    "Consolidated public sector overall balance 1/ (in percent of GDP): -3.2 (1999), -0.6 (2000), 0.3 (2001).",
    "Public sector external debt (end-of-year, percent of GDP): 28.9 (1999), 30.6 (2000), 33.5 (2001), 42.9 (2002), 44.3 (2003), 40.5 (2004).",
    "International reserves (in millions of U.S. dollars): 988 (1999), 772 (2000), 723 (2001), 641 (2002), 818 (2003), 855 (2004).",
    "GDP (in billions of guaranies): 24,144 (1999), 26,921 (2000), 28,119 (2001), 31,977 (2002), 37,302 (2003), 40,779 (2004).",
    "[Paraguay and the IMF](http://www.imf.org/external/country/PRY/index.htm)",
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    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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