Construction Companies Await Factoring Regulation to Reduce State Debt

The construction industry in Paraguay is in a holding pattern, anxiously awaiting the government's regulation of factoring mechanisms. This financial tool is seen as crucial for tackling the substantial debt the state owes to contracting companies. While the government has made some progress in adhering to payment schedules for April and May, these disbursements primarily cover newly generated work certificates, leaving the significant backlog of accumulated debt largely untouched.

Paul Sarubbi, president of the Paraguayan Chamber of Road Construction (Cavialpa), stressed the urgency of implementing factoring. This mechanism allows financial institutions to purchase debt, providing much-needed liquidity to contractors. Currently, companies are forced to rely on expensive private financing to maintain payment chains for ongoing projects, leading to a continuous accumulation of interest on the state's outstanding obligations. The government's commitment to disburse US$150 million over April and May, while seemingly substantial, only offers a marginal reduction in the overall debt when considering the new certificates issued each month.

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The industry of construction awaits the government to regulate factoring to reduce state debt.

Cavialpa highlights that at the end of 2025, the state's debts to various sectors were considerable, with the construction industry facing over US$350 million. This situation underscores the critical need for financial solutions like factoring, especially within the constraints of the national budget and the fiscal ceiling of 1.5% of GDP. The industry is actively engaging in discussions, with a forum on infrastructure investment planned for May 21st during the Constructecnia 2026 Fair, aiming to foster dialogue and find sustainable solutions amidst fiscal challenges.

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Normally, between US$50 million and US$60 million in work certificates are processed each month. In these two months, if the average is maintained, it would be US$100 million in new debt. And if the US$150 million are paid, only US$50 million would serve to amortize the accumulated debt.