{
  "title": "IMF Executive Board Approves Paraguay’s Policy Coordination Instrument",
  "publication": "IMF News, November 22, 2022",
  "sourceUrl": "https://www.imf.org/en/news/articles/2022/11/22/pr22406-imf-executive-board-approves-paraguay-policy-coordination-instrument",
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  "summary": "IMF Paraguay Policy Coordination Instrument",
  "publishDate": "2022-11-22",
  "sections": [
    {
      "heading": "Overview",
      "content": "- Press Release No. 22/406 dated November 22, 2022.\n- On November 21, 2022, the Executive Board of the International Monetary Fund (IMF) approved a two-year Policy Coordination Instrument (PCI) for Paraguay.\n- The PCI involves no use of IMF resources and is available to IMF members that do not need Fund financial resources at the time of approval."
    },
    {
      "heading": "Program objectives and structure",
      "content": "- Purpose:\n  - Underpin the implementation of needed structural reforms following very positive experiences with Fund-supported programs.\n  - Signal Paraguay’s commitment to continued strong economic policies and structural reforms.\n- Duration and review schedule:\n  - Two-year instrument covering the last year of the current and the first year of the next administration.\n  - Program reviews take place on a semi-annual fixed schedule."
    },
    {
      "heading": "Macroeconomic context and outlook",
      "content": "- Current situation:\n  - Paraguay continues to recover from the COVID-19 pandemic amidst simultaneous shocks that would lead to flat GDP growth and inflation above the Central Bank’s target range this year.\n  - The economy faced a severe drought in late 2021/early 2022 and a spike in global inflation exacerbated by Russia’s war in Ukraine.\n- Outlook:\n  - The outlook for a recovery in 2023 is favorable, though risks arise from global headwinds, more frequent adverse climate shocks, and domestic uncertainties."
    },
    {
      "heading": "Three key pillars anchoring the authorities’ reform efforts",
      "content": "- (i) Ensure macroeconomic stability and resilience:\n  - Rebuild fiscal buffers and ensure fiscal sustainability going forward.\n  - Continue to implement a data-dependent and forward-looking monetary policy.\n- (ii) Enhance productivity and foster economic growth:\n  - Advance structural reforms to improve the effectiveness of the government, modernize the public sector, and improve the business climate.\n- (iii) Enhance social protection and inclusiveness:\n  - Augment coverage and efficiency of Paraguay's social assistance programs.\n  - Implement reforms to pull informal workers into the formal economy."
    },
    {
      "heading": "Specific targets, measures, and policy directions highlighted by the Acting Chair",
      "content": "- Fiscal policy:\n  - Rebuilding policy buffers and returning to the fiscal deficit ceiling of 1.5 percent of GDP in 2024 is identified as critical.\n  - Important measures include enhancing domestic revenue mobilization, reforming the public pension fund, and raising the efficiency of the public sector.\n- Monetary and exchange rate policy:\n  - Monetary policy is aimed at bringing inflation back to the 4 percent target and keeping inflation expectations well-anchored.\n  - The authorities are committed to maintaining a strong reserve position and using foreign exchange interventions only to address disorderly market conditions.\n- Structural and institutional reforms:\n  - Modernize public institutions, increase government effectiveness, strengthen governance and controlling corruption, and improve the business climate.\n  - Build resilience to climate change.\n- Social policy and inclusion:\n  - Improve the impact of social assistance programs, increase their coverage among the vulnerable population, promote the formalization of the economy, and strengthen financial inclusion."
    },
    {
      "heading": "Implementation, signaling, and expected benefits",
      "content": "- Although the PCI uses no IMF resources, successful completion of program reviews would help signal Paraguay’s commitment to continued strong economic policies and structural reforms.\n- The PCI is underpinned by strong macroeconomic policy plans and will support ongoing initiatives aimed at implementing a broad structural reform agenda.\n\nIMF Press Release No. 22/406 (November 22, 2022).\n\n---\n\n\n References\n\n- Paraguay and the IMF\n- Press Releases\n- PRESS CENTER\n- https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2022/11/22/pr22406-imf-executive-board-approves-paraguay-policy-coordination-instrument"
    }
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    "Published: November 22, 2022",
    "Press Release No. 22/406 dated November 22, 2022.",
    "On November 21, 2022, the Executive Board of the International Monetary Fund (IMF) approved a two-year Policy Coordination Instrument (PCI) for Paraguay.",
    "The PCI involves no use of IMF resources and is available to IMF members that do not need Fund financial resources at the time of approval.",
    "Purpose:",
    "Duration and review schedule:",
    "Current situation:",
    "Outlook:",
    "(i) Ensure macroeconomic stability and resilience:",
    "(ii) Enhance productivity and foster economic growth:",
    "(iii) Enhance social protection and inclusiveness:",
    "Fiscal policy:",
    "Monetary and exchange rate policy:",
    "Structural and institutional reforms:",
    "Social policy and inclusion:",
    "Although the PCI uses no IMF resources, successful completion of program reviews would help signal Paraguay’s commitment to continued strong economic policies and structural reforms.",
    "The PCI is underpinned by strong macroeconomic policy plans and will support ongoing initiatives aimed at implementing a broad structural reform agenda.",
    "[Paraguay and the IMF](http://www.imf.org/external/country/PRY/index.htm)",
    "[Press Releases](https://www.imf.org/en/news/searchnews)",
    "[PRESS CENTER](http://presscenter.imf.org/)",
    "[https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument](https://www.imf.org/en/About/Factsheets/Sheets/2017/07/25/policy-coordination-instrument)",
    "[https://www.imf.org/en/home](https://www.imf.org/en/home)"
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