ASUNCIÓN, PARAGUAY – Javier Charotti, Deputy Minister of Economy, cited fiscal consolidation as a key achievement of the Paraguayan government during his two-year tenure. He emphasized that this has slowed the pace of public debt growth and laid a solid foundation for economic expansion. In an interview with a local media outlet on May 25, Deputy Minister Charotti provided an in-depth analysis of Paraguay’s current economic situation and detailed the government’s reform agenda. He also discussed his new role as the newly appointed representative for Paraguay at the Inter-American Development Bank (IDB) and the Inter-American Investment Corporation (CII), and the benefits this will bring to the country.
Paraguayan Economy: Robust Growth and Fiscal Consolidation Hand in Hand
Deputy Minister Charotti assessed the current Paraguayan economy as exhibiting “very important dynamism.” Citing the Monthly Economic Activity Index (IMAE), he explained that the cumulative 12-month growth rate has exceeded 4% since July 2023 and currently remains at 4-5%. Excluding volatile factors such as agriculture and bilateral cooperation sectors, he added that the cumulative 12-month growth rate reached 6.28%.
What is notable about this growth is that it is occurring with inflation rates close to the target. Deputy Minister Charotti acknowledged that rising food prices remain a concern, directly impacting people’s purchasing power. However, he simultaneously emphasized that this growth has been achieved amidst a process of fiscal consolidation. He stated that when the current government took office, “rebuilding the pillars of the macroeconomy was the top priority,” which meant stabilizing the fiscal deficit and re-establishing public finances as a core foundation.
Indeed, Paraguay has significantly reduced its fiscal deficit, which had reached 4.1% of GDP, and has paid off all outstanding debts incurred during the pandemic. As of the first quarter of 2025, the target deficit rate of 1.9% of GDP has been achieved, and Deputy Minister Charotti expressed confidence that this fiscal convergence is proceeding as planned. He stressed that “we will once again achieve the targets stipulated in the fiscal rule for several years,” highlighting this as a very significant accomplishment. The fact that this entire process has occurred alongside economic growth approaching or exceeding 4% for three consecutive years demonstrates the resilience of the Paraguayan economy.
Public Perception of the Economy: A Complex View and Food Price Pressure
Deputy Minister Charotti maintained a very cautious stance on the public’s perception of the economy. He cautioned against generalizations such as “people are not satisfied,” while acknowledging that the minimal income growth for those at the bottom of the income distribution is certainly a worrying aspect.
He presented several indicators to gauge the public’s economic sentiment. For instance, he explained that the recent bustling scene on Calle Palma, a vibrant street in Buenos Aires, was something rarely seen before, suggesting increased consumption. He also mentioned that representatives from the Supermarket Chain Association (Capasu) were satisfied with their sales, implying that the perceived economic situation can differ depending on one’s perspective.
However, Deputy Minister Charotti clearly identified rising food prices as a major source of public dissatisfaction. He stated, “While the inflation rate indicates changes in people’s cost of living, food prices, in particular, remain high, causing dissatisfaction.” This indicates the need for the Paraguayan government to make additional efforts to stabilize food prices.
Key Achievements Over the Last Two Years: Fiscal Consolidation and Reform Drive
Deputy Minister Charotti identified fiscal convergence as the most significant achievement during his nearly two years in office. He emphasized, “We were able to resolve the public finance issues caused by the pandemic, which, far from negatively impacting our credit rating, allowed for an upgrade.” This signifies that Paraguay has gained international trust by securing fiscal soundness.
He also stated that he successfully led key negotiations with the International Monetary Fund (IMF) and pushed forward an ambitious reform agenda, including the state-owned electricity company ANDE. In particular, he noted that the IDB climate project to address the issue of Lago de Ypacaraí will be a very important project. He added that the issuance of the Guaraní currency was also a significant milestone.
One of the most important challenges ahead is the establishment of a National Planning System linked to the new National Development Plan. He explained that the new approach emphasizes a participatory strategy that goes beyond simply linking plans and programs to the budget, examining whether a specific policy (A) achieved a specific goal (B) at a specific time (X). He stressed that with the introduction of this planning system, the regional development planning and international cooperation sectors, which were core missions of the former Technical Planning Secretariat (STP), will grow significantly, institutional efficiency and agility will increase, and bureaucratic procedures will be substantially reduced.
National Development Plan 2050: A Comprehensive and Participatory Future Vision
The National Development Plan 2050 has core pillars of human and social capital, infrastructure, innovation and competitiveness, environment and energy, institutional strengthening, security, and international standing. Deputy Minister Charotti explained that these pillars are comprehensive and embody a regional vision. Each pillar is further divided into detailed components, including strategic and specific objectives such as employment, labor, pensions, preventive healthcare, education, arts and culture, social protection, and integration.
This plan is expected to be announced soon, along with a citizen participation strategy. This aims to create spaces for communication with all stakeholders, including state governments, municipalities, citizens, universities, and churches. Deputy Minister Charotti stated that direct public feedback on employment, labor, productivity, re-employment, formalization of employment, training of middle management, and addressing labor market supply imbalances will be gathered through street surveys. These opinions will be conveyed to relevant ministries such as the Ministry of Labor, Ministry of Economy, and Ministry of Industry and Commerce, to be incorporated into policy formulation or to include existing policies in the national plan.
He emphasized, “This is the first time we will have a National Planning System,” and that planning will be integrated into the daily operations of the Ministry of Economy. This means that the activities of all ministries must be included within the framework of these plans, programs, and projects. He explained that the core of this plan lies in securing budgets and analyzing impacts, ensuring that specific policies (A) achieve specific goals (B) by a specific date.
The plan is expected to commence in the second half of 2025, with several programs already underway, including the National Anti-Corruption Plan, the Zero Hunger Plan (Hambre Cero), and Tekoporã Mbarete. Furthermore, key foundations such as the target inflation rate, fiscal consolidation, and investment in social infrastructure are also being emphasized as part of improving the business environment. The first approved budget has already seen significant investment in water and sanitation programs, and social infrastructure also includes hospitals, Family Health Units (Unidad de Salud Familiar), and housing programs like Che Róga Porã. New programs to address qualitative defects in housing are also planned.
Fiscal Policy Outlook and Public Debt Management
Regarding the government’s fiscal policy outlook, Deputy Minister Charotti reiterated that fiscal convergence is proceeding as planned. The plan announced in August 2023 is being well implemented, and the deficit figures align with the plan. He stated that the goal is to close this year with a deficit of 1.9%, which was the ceiling set during last year’s budget approval. He also emphasized that for the budget to be approved this year, a maximum deficit ceiling of 1.5% will be set, which will fully achieve the fiscal convergence target. He added that this is crucial for macroeconomic stability.
Public debt increases when a fiscal deficit occurs. Deputy Minister Charotti explained that the government is working to return the fiscal deficit to normal levels in accordance with fiscal responsibility laws. While the 1.9% deficit this year might lead to a slight increase in debt, it will not be at the same pace as before, and he projected a downward curve thereafter.
To manage public debt, the government has implemented three key strategies. First, it has altered the maturity structure, extending the debt’s maturity significantly. Second, it is pursuing the Guaranization of debt, planning to increase the proportion of Guaraní-denominated debt from an initial 5-6% to 15%. Third, it is making significant efforts to deepen the domestic market, attracting new investors, including non-residents. Deputy Minister Charotti explained that these efforts are contributing significantly to improving the depth and liquidity of Paraguay’s domestic financial market.
Appointment as IDB and CII Representative: Strengthening Paraguay's International Stature
Deputy Minister Javier Charotti explained the significance and main objectives of his appointment as Paraguay’s representative to the Inter-American Development Bank (IDB) and the Inter-American Investment Corporation (CII). His primary responsibility is to lead the IDB’s operations with the support of the Board of Governors.
One of his key objectives is to ensure that IDB operations reflect the Paraguayan government’s vision that the private sector is the engine of economic growth. From this perspective, he emphasized the importance of multilateral institutions’ operations supporting private companies and various private sector projects in achieving financially successful outcomes and maximizing economic, social, and environmental development.
Of particular note is the fact that Paraguay will host the IDB Annual Meeting in March 2026. Deputy Minister Charotti stated that Paraguay’s selection as the host reflects “international recognition of its economic stability and regional leadership.” Through this event, Paraguay is expected to solidify its role on the international stage and strengthen international relations. Over 3,000 participants (delegations from member countries and investors) from the IDB’s 48 member countries are expected to attend this multilateral conference, which is anticipated to significantly boost Paraguay’s economic and tourism activities.
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