Paraguay: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Paraguay

IMF Staff Country Reports, April 22, 2020

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Paraguay: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Paraguay

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Bibliographic details

• Published: April 22, 2020
• Series: IMF Staff Country Reports
• DOI: https://doi.org/10.5089/9781513541815.002

Request and context

• Presents Paraguay’s Request for Purchase Under the Rapid Financing Instrument (RFI).
• In March 2020, Paraguay was hit by the Covid-19 epidemic, which has created fiscal and balance of payments needs.
• The authorities are requesting financial assistance under the IMF’s RFI to address the urgent balance of payments needs associated with the Covid-19 epidemic.
• Given the urgency of their request, there is no time to put in place a full-fledged upper credit tranche program.

Assessment of authorities' response and constraints

• The authorities’ policy response to the epidemic has been timely.
• Limited access to financing and a weakened fiscal position constrain the ability to pursue a deeper emergency response.
• The authorities are of the view that they can make suitable adjustments to manage their medium-term balance of payments challenges.

Policy recommendations and macroeconomic framework

• Return to the deficit ceiling under the Fiscal Responsibility Law in order to prevent the emergence of permanently high deficits after the crisis.
• Allow the exchange rate to continue to function as a shock absorber.
• Monetary policy should focus on inflation targeting.

Key themes and subject areas

• Banking
• COVID-19
• Credit
• Exchange rates
• External debt
• Foreign exchange
• Health
• Money
• Public debt
• Revenue administration

International Monetary Fund. Paraguay: Request for Purchase Under the Rapid Financing Instrument-Press Release; Staff Report; and Statement by the Executive Director for Paraguay (April 22, 2020).

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