## IMF Executive Board Concludes Fifth Review Under the Policy Coordination Instrument (PCI) and the Third Review Under the Arrangement Under the Resilience and Sustainability Facility of Paraguay

_IMF News, June 27, 2025_

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## Bibliographic details
- Published: June 27, 2025

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### Reviews, financing access, and program performance
- The Executive Board completed the fifth review under the Policy Coordination Instrument (PCI) and the third review under the Resilience and Sustainability Facility (RSF).
- Completion of the reviews provides the authorities with access to approximately US$ 285 million (SDR 211.46 million) under the RSF, of which the authorities have requested disbursement of US$ 195 million (SDR 146 million).
- Program performance under the PCI and RSF is described as “very satisfactory,” supported by a strong commitment to prudent macroeconomic policies and structural reforms.

### Economic activity and outlook
- Real GDP grew 4.2 percent in 2024.
- Real GDP is expected to expand 3.8 percent in 2025.
- Buoyant private consumption and gross fixed capital formation outweighed a negative contribution from net exports in 2024, with the latter primarily reflecting lower electricity production and exports.
- Economic activity continued its strong momentum in early 2025.
- Headline inflation remains contained within the central bank’s tolerance range.

### Fiscal developments and public finances
- The fiscal deficit declined to 2.6 percent of GDP in 2024, down from 4.1 percent in 2023, supported by a substantial increase in tax revenue.
- The fiscal deficit is projected to decline to 1.9 percent of GDP in 2025.
- The authorities aim to reduce the deficit to 1.5 percent of GDP by 2026—the ceiling established by the Fiscal Responsibility Law.
- The statement highlights the need to bolster tax revenues and improve the efficiency of public expenditure to support fiscal consolidation goals.
- Addressing the sustainability of the public employees’ pension fund is identified as essential to mitigate medium-term fiscal risks.

### External sector and reserves
- The current account deficit widened to 3.7 percent of GDP in 2024, from 0.4 percent in 2023, primarily due to lower export revenues driven by lower soybean prices and a drop in hydroelectricity exports because of low river water levels.
- Foreign reserves remain comfortably above standard adequacy metrics.

### Monetary, financial sector, and structural resilience
- With inflation contained within the central bank’s tolerance range, monetary policy should remain data driven.
- The exchange rate should continue to serve as a shock absorber.
- The banking sector is characterized as well capitalized, liquid, and profitable.
- Authorities plan to deepen and modernize capital markets.
- Further strengthening of AML/CFT frameworks, including by promptly finalizing the National Risk Assessment, is urged.

### Risks, reform priorities, and policy recommendations (as stated by Mr. Nigel Clarke, Deputy Managing Director, and Acting Chair)
- The outlook is favorable but subject to elevated global risks and to adverse weather shocks.
- Staying the course with prudent macroeconomic management is emphasized as a cornerstone of macroeconomic stability.
- Recommended policy and reform priorities:
  - Continue fiscal consolidation and advance the fiscal consolidation plan.
  - Bolster tax revenues and improve public expenditure efficiency.
  - Address pension fund sustainability to mitigate medium-term fiscal risks.
  - Gradually decrease the proportion of debt denominated in foreign currency to strengthen the public debt risk profile.
  - Reduce informality, strengthen governance and anti-corruption frameworks, and enhance resilience to natural disasters.
  - Sustain efforts to reform under the Policy Coordination Instrument and the Resilience and Sustainability Facility to improve the business environment and attract investment.

*IMF Executive Board press release, June 27, 2025.*

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## References

- [Paraguay and the IMF](http://www.imf.org/external/country/PRY/index.htm)
- [IMF-World Bank Debt Sustainability Framework for Low-Income Countries -- A Factsheet](https://www.imf.org/en/about/factsheets/sheets/2023/imf-world-bank-debt-sustainability-framework-for-low-income-countries)
- [Press Releases](https://www.imf.org/en/news/searchnews)
- [PRESS CENTER](http://presscenter.imf.org/)
- [https://www.imf.org/en/home](https://www.imf.org/en/home)

_Source: https://www.imf.org/en/news/articles/2025/06/27/pr-25224-paraguay-imf-concludes-5th-rev-under-pci-and-3rd-rev-under-rsf_