Fireside Chat, Conference Presentation
A Conversation with the President of Paraguay H.E. Santiago Peña | Global Conference 2025
- Paraguay's credit outlook was revised to positive by S&P Global due to potential fiscal trajectory improvements; the country previously received an investment-grade upgrade from Moody's last year.
- Paraguay's sovereign bond spreads currently perform at parity with Uruguay and closely align with Chile, positioning it as a top economic performer in Latin America.
- President Santiago Pena emphasized that Paraguay has maintained the same currency for 82 years, contrasting with the volatility and currency instability experienced in neighbors Brazil and Argentina.
- The Paraguayan government has enacted a "no shortcuts" policy, establishing an independent central bank and enforcing strict fiscal rules to ensure long-term stability.
- Paraguay's fiscal deficit was recorded at 2.6% last year, with a commitment to reduce it to 1.9% for the current year and further convergence toward fiscal responsibility in the following year.
- Recent administrations have maintained fiscal discipline for 12 months, despite utilizing exit clauses during the pandemic, avoiding the political swings of populism common in the region.
- The economy has diversified beyond agriculture, with manufactured goods now exceeding agricultural exports as a share of total exports.
- Paraguay projects 5% growth for 2023 and 4% growth for 2024, with a 4% growth projection for 2025 driven by industrial diversification.
- Brazil has become Paraguay's largest foreign direct investor, surpassing the U.S., as Brazilian companies utilize Paraguay as a near-shoring hub to serve the São Paulo market.
- Manufacturing sectors expanding in Paraguay include auto parts, textiles, and food processing, operating similarly to a maquila regime for export.
- Argentina's recent aggressive policy shifts to open its market have enabled Paraguay to export goods that were previously restricted for 40 years.
- Paraguay has signed a free trade agreement with the European Union and is currently negotiating similar agreements with the UAE.
- The country possesses vast untapped potential, including 100% arable land, the world's largest freshwater aquifer, and a young demographic with an average age of 28.
- Paraguay implemented a simplified tax regime 25 years ago, standardizing VAT, corporate tax, and personal income tax rates at 10%.
- The government has adopted a "regulatory sandbox" approach, accelerating business registration and allowing financial innovation ahead of traditional regulation.
- Paraguay's banking sector, including mobile payments and digital banking, is now ranked among the most profitable globally.
- Electricity generation is 100% renewable, sourced entirely from massive hydroelectric dams built 50 years ago, with the country exporting half of its production.
- Energy consumption has surged by 20% in the last year, driven by industrial growth, prompting plans to expand hydroelectric capacity and integrate solar power.
- President Pena is actively courting hyperscalers and crypto miners with short-term energy contracts while seeking medium-to-long-term investments in technology and green hydrogen.
- Paraguay is upgrading its digital infrastructure to become a submarine cable hub, connecting the Ella cable (Europe-Brazil) with the Humber project (Asia-Chile) to serve as a digital gateway.
- To support the technology sector, Paraguay established a joint university with Taiwan 10 years ago, having graduated nearly 1,000 technological engineers through a rotation program.
- Five of the world's six largest wire harness manufacturers now produce goods in Paraguay specifically for the Brazilian market.
- Paraguay maintains diplomatic relations with Taiwan and considers it a development model, despite the geopolitical tensions involving China.
- Paraguay reopened its embassy in Jerusalem last December and has designated Hamas, Hezbollah, and the Iranian Revolutionary Guard as terrorist organizations.
- The government is pursuing OECD membership as a "seal of trust" to provide long-term assurance to foreign investors regarding political and economic stability.
- Paraguay is advancing green hydrogen initiatives, including a large investment from a British company focused on green fertilizer production.
- Historical context notes that Paraguay's development was halted for a century following the War of the Triple Alliance (1864–1870), which resulted in the loss of 60% of its territory and 90% of its male population.