## IMF Executive Board Concludes 2026 Article IV Consultation with Paraguay

_IMF News, August 28, 2026_

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## Bibliographic details
- Published: August 28, 2026

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### Overview
- Paraguay’s economy continues to show remarkable resilience, supported by strong macroeconomic fundamentals and reform efforts.
- Sustained structural reform implementation will be key to lifting productivity and ensuring durable and inclusive growth over the medium term.
- The Executive Board completed the Article IV Consultation for Paraguay; the authorities consented to publication of the Staff Report prepared for this consultation.

### Macroeconomic performance and outlook
- Real GDP:
  - Expanded 6.6 percent in 2025.
  - Grew 5.8 percent year on year (y-o-y) in 2026 Q1.
  - Growth in 2026 is expected to reach 4.4 percent and to moderate to its potential of 3.8 percent over the medium term.
- Sector drivers: strong performance of services, manufacturing, agriculture, construction, and energy distribution.
- Inflation:
  - Headline inflation reached 2.1 percent, y-o-y, in June.
  - Headline inflation is projected to reach the central bank’s target of 3.5 percent this year.
- External sector:
  - Current account deficit declined in 2025 to 2.5 percent of GDP and is expected to reach 2.6 percent in 2026.
  - The guaraní appreciated 23.1 percent against the U.S. dollar in nominal terms, y-o-y, and 8.6 percent year to date in June 2026.
  - Net international reserves stood at around USD11 billion in end-June; gross reserves are well within adequacy thresholds.

### Fiscal policy and public finances
- Fiscal deficit:
  - Reached 2 percent of GDP in 2025.
  - Expected to increase to 3.5 percent of GDP in 2026 owing mainly to the partial clearance of expenditure arrears accumulated over 2023-2025 and weaker revenues owing to the appreciation of the guaraní.
- Revenues and collections as of June, 2026:
  - Tax revenue grew by 2.1 percent, y-o-y, cumulatively, driven by internal taxes.
  - Customs revenue shrunk by 11.5 percent.
  - Non-tax revenue declined 11.3 percent y-o-y, owing mainly to the guaraní appreciation.
- Policy guidance:
  - Fiscal policy should remain anchored on restoring compliance with the Fiscal Responsibility Law (FRL) while protecting essential spending.
  - Strengthen public financial management and settle expenditure arrears to preserve fiscal policy credibility.
  - Review and strengthen the fiscal framework once consolidation goals have been achieved.

### Monetary policy and exchange rate
- Policy stance:
  - The current monetary policy settings are appropriate in the near term.
  - There would be scope for gradual further easing of the monetary policy stance if the energy shock proves temporary, inflation expectations remain anchored, and economic activity moderates as projected.
- Exchange rate framework:
  - Paraguay’s credible inflation-targeting framework and flexible exchange rate have supported macroeconomic stability.
  - The exchange rate should continue to play a key role in absorbing external shocks.
  - Directors encouraged additional efforts to enhance liquidity and FX management frameworks and to strengthen central bank autonomy and governance.
- Monetary indicators:
  - Monetary policy rate, year-end (as of July 2026) and other monetary figures are reported in Table 1 of the staff report.

### Financial sector
- Credit growth and banking sector:
  - Overall credit growth moderated after peaking in early 2025 at 22.8 percent.
  - Credit growth reached 6.8 percent in December, y-o-y, and 3.2 percent in May 2026.
  - Consumer credit still expanded at 22.8 percent.
- Banking soundness:
  - In May 2026, banks’ liquid assets stood at 24.3 percent of total liabilities.
  - Capital adequacy ratios were 14 percent (Tier 1) and 17.3 percent (total regulatory capital), above the minimums of 8 percent and 12 percent, respectively.
- Policy guidance:
  - Rapid consumer credit growth warrants close monitoring and readiness to act if signs of weaker underwriting standards emerge.
  - Develop a macroprudential toolkit, especially borrower-based tools, to contain vulnerabilities.

### Structural reforms, governance, and AML/CFT
- Directors’ recommendations:
  - Continue sustained implementation of structural reforms to increase productivity and ensure durable and inclusive growth.
  - Pursue additional reforms to reduce informality, building on recent gains.
  - Further strengthen governance and anti-corruption institutions to support the investment climate.
  - Continue climate-related reforms, including those initiated under the RSF, to strengthen resilience to natural disasters.
  - Complete approval of the updated National Risk Assessment and promptly address any identified gaps to further strengthen the AML/CFT framework.

### Executive Board assessment
- Directors agreed with the thrust of the staff appraisal and welcomed Paraguay’s continued strong macroeconomic performance, sound policies, and sustained structural reforms.
- They noted favorable medium-term growth prospects and balanced risks to the outlook, while underscoring heightened external uncertainty and domestic vulnerabilities.
- Key emphases:
  - Maintain prudent macroeconomic policies.
  - Restore compliance with the Fiscal Responsibility Law (FRL) by 2028.
  - Improve tax administration and broaden the tax base; strengthen expenditure efficiency.
  - Timely clearance of expenditure arrears and strengthened public financial management to preserve fiscal credibility.
  - Data-driven monetary policy and enhanced central bank autonomy and governance.
  - Strengthen macroprudential frameworks and AML/CFT measures.

### Key statistics and projections (selected, as reported)
- Population 2025 (millions): 6.4
- Gini index (2024): 44.2
- Unemployment rate (2026Q1): 5.3 (of which, female: 6.2; male: 4.6)
- Life expectancy at birth (2024): 74.0
- Adult literacy rate (2024): 95.0
- Percentage of population below the poverty line (2025): 16.0 (of which, female: 94.0; male:95.0)
- Rank in UNDP development index (2022): 102 of 193
- GDP per capita (US$, 2025): 7,679
- Real GDP growth (selected years): 5.3 (2023); 4.7 (2024); 6.6 (2025); 4.4 (2026); 3.8 (medium term potential)
- Consumer prices (end of period): 3.1 (2025); 3.5 (2026 projection)
- Nominal exchange rate (LC$/US$, eop) 1/: 7,274 (2023); 7,828 (2024); 6,579 (2025); 6,062 (2026)
- Credit to private sector 2/: 10.0 (2023); 17.5 (2024); 7.4 (2025); 6.9 (2026)
- Current account balance (percent of GDP): -3.3 (2023); -2.5 (2025); -2.6 (2026)
- Gross international reserves (in US$ millions): 9,892 (2023); 9,568 (2024); 10,663 (2025); 10,963 (2026)
- Public sector debt (excl. Central Bank bills): 41.0 (2023); 44.6 (2024); 38.2 (2025); 36.7 (2026)
- GDP (billions of guaranies): 314,445 (2023); 338,237 (2024); 371,826 (2025); 400,397 (2026)
- GDP (US$ billions): 43.1 (2023); 44.7 (2024); 49.3 (2025)

*IMF Communications Department. Press Release No. 26/280. August 28, 2026.*

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## References

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_Source: https://www.imf.org/en/news/articles/2026/08/28/pr26280-paraguay-imf-executive-board-concludes-2026-article-iv-consultation_