Paraguay: Sixth Review Under the Policy Coordination Instrument, and Fourth Review Under the Resilience and Sustainability Facility Arrangement-Press Release; Staff Report; and Staff Supplement
January 23, 2026
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Economic activity remains strong despite global uncertainty.
Favorable medium-term growth prospects are underpinned by Paraguay’s macroeconomic
stability and the ongoing implementation of comprehensive structural reforms. Inflation
remains under control, public debt at prudent levels, and foreign reserves above adequacy
benchmarks. Fiscal consolidation is progressing in line with the authorities’ plans and
adherence to the Fiscal Responsibility Law is expected to be restored in 2026 for the first
time since 2018. Risks to the outlook are balanced: Adverse weather shocks remain a
significant downside risk, while higher-than-expected FDI inflows owing to the country’s
comparative advantages present upside potential.
Favorable medium-term growth prospects are underpinned by Paraguay’s macroeconomic
stability and the ongoing implementation of comprehensive structural reforms. Inflation
remains under control, public debt at prudent levels, and foreign reserves above adequacy
benchmarks. Fiscal consolidation is progressing in line with the authorities’ plans and
adherence to the Fiscal Responsibility Law is expected to be restored in 2026 for the first
time since 2018. Risks to the outlook are balanced: Adverse weather shocks remain a
significant downside risk, while higher-than-expected FDI inflows owing to the country’s
comparative advantages present upside potential.
Subject: Expenditure, Fiscal consolidation, Fiscal policy, Inflation, Prices, Revenue administration
Keywords: Fiscal consolidation, Inflation
Pages:
73
Volume:
2026
DOI:
Issue:
013
Series:
Country Report No. 2026/013
Stock No:
1PRYEA2026001
ISBN:
9798229033879
ISSN:
1934-7685
