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Paraguay: Experts Urge Separation of Strategic Investment from Current Spending
🇵🇾 Paraguay /Economy & Trade

Paraguay: Experts Urge Separation of Strategic Investment from Current Spending

From ABC Color · () Spanish

Translated from Spanish, summarized and contextualized by DistantNews.

At a glance

News Named sources Context piece
  • Economists and construction industry leaders in Paraguay are advocating for a distinction between current spending and strategic infrastructure investment.
  • They argue that rigid fiscal deficit limits hinder necessary public investment for economic development.
  • International experience suggests that efficient, strategic spending, not just increased investment, drives growth and public welfare.

Asunción, Paraguay – Experts and industry leaders are calling for a re-evaluation of fiscal policies in Paraguay, urging a clear differentiation between essential current expenditures and strategic infrastructure investments. The debate intensified during a recent conference in Asunción, where Peruvian economist Milton von Hesse addressed the challenges of maintaining public investment amid fiscal constraints.

The experience of international countries, particularly Asian countries and cases like China, shows that dynamism in capital formation is the basis of Gross Domestic Product (GDP).

— Milton von HesseThe economist highlights the importance of capital formation for economic growth, drawing on international examples.

Von Hesse, who has held ministerial positions in Peru related to construction, sanitation, agriculture, and economics, emphasized the direct correlation between investment and a nation's economic development. However, he cautioned that in times of fiscal stringency, the focus must shift from simply increasing spending to ensuring efficiency and strategic allocation. "It's not much use to me if I invest a lot of money in bad projects that later do not generate well-being for the population," he stated.

Following von Hesse's presentation at the Constructecnia 2026 fair, representatives from Paraguay's construction sector, including Paul Sarubbi of the Paraguayan Road Chamber (Cavialpa) and Guillermo Mas, former head of the Paraguayan Chamber of Construction (Capaco), voiced their concerns. They argued that Paraguay's rigid fiscal deficit cap impedes crucial infrastructure projects that are vital for long-term economic growth. They advocate for a framework that allows for strategic investments, distinguishing them from day-to-day operational costs.

It's not much use to me if I invest a lot of money in bad projects that later do not generate well-being for the population.

— Milton von HesseVon Hesse stresses the critical importance of the quality and efficiency of public spending over sheer volume.

Von Hesse noted that Paraguay has maintained one of Latin America's highest growth rates in public investment over the past decade. However, he also pointed to the doubling of public debt relative to GDP in the same period, suggesting a need to limit reliance on debt financing. He drew a comparison with Peru, which has benefited from greater fiscal flexibility due to mining revenues, enabling it to avoid drastic infrastructure adjustments.

So important or more important than investing more is investing better.

— Milton von HesseThis quote encapsulates the core message about prioritizing efficient spending in infrastructure.
DistantNews Editorial

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized by our editorial team with added local perspective. Read our editorial standards.

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