The Ministry of Public Works and Communications (MOPC) of Paraguay has announced its 2026 budget, and infrastructure investment is expected to contract significantly. Minister Claudia Centurión visited the budget committee on the 22nd to submit next year's budget proposal, totaling 6.9925 trillion guaraníes (approximately $887 million). This represents a decrease of about 2% from this year's budget of 7.2306 trillion guaraníes (approximately $906 million).

The biggest concern is the substantial cut in the physical investment budget. The budget for 'Item 500' for infrastructure investment in 2026 has been reduced from $648 million to $648 million, a cut of 7%. This lowers its proportion of the total budget from 72% to 68%. Deputy Minister Marco Elizeche revealed that 368 billion guaraníes (approximately $50 million) was cut from the physical investment sector alone. He expressed concern over the continuing trend of investment reduction in recent years, stating, "The situation of restoring fiscal soundness could be an obstacle to solving the challenges we have."

This budget proposal is seen as part of a fiscal consolidation plan aimed at stabilizing finances. Minister Centurión explained that the investment budget cut was unavoidable due to this plan. She added that the government is in a difficult situation, having to repay a debt of approximately $100 million.

While the investment budget has been cut, personnel costs and some operating expenses have increased. Personnel costs are set to increase by 5%, and other operating service costs by 24%. This is due to expenses related to large-scale services, insurance, and vehicle and equipment maintenance.

Changes in funding methods also influenced the budget cuts. The amount of funding raised through the issuance of government bonds in 2026 will increase from $291 million this year to $369 million. This is interpreted as the government's effort to increase revenue for 'fiscal consolidation.' However, at the same time, funds used for public works are being cut.

Minister Centurión said that despite the budget cuts, she expects the situation to improve due to the government's efforts to secure finances and increase tax revenue. She emphasized, "Currently, 143 projects are underway, with a total project cost of $1.4 billion," and that they will overcome the difficult situation and continue to invest. She added, "We will aim to execute 80-85% of the budget given to us."

This budget proposal clearly shows the government's fiscal stance of 'tightening its belt.' As infrastructure investment is essential for economic growth, attention is focused on what impact the budget cuts will have in the future. The MOPC is faced with the challenge of carefully deciding which projects to prioritize and execute with a limited budget.

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