Paraguay Ranks Among the Region’s Lowest-Risk Economies With 107 Points

Paraguay ended August with a country-risk rating of 107 basis points, placing it only one point above Peru and reinforcing its position among Latin America’s lower-risk economies. The figure marks a sharp improvement from the 135 points recorded in August 2025.

JPMorgan’s Emerging Markets Bond Index measures the premium investors demand to hold emerging-market sovereign debt instead of U.S. Treasury bonds. Paraguay’s spread fell by 28 basis points, or 20.7%, over the year. Uruguay remained the region’s lowest-risk economy at 65 points, followed by Chile at 87 and Peru at 106.

The improvement extends beyond Paraguay. Brazil’s spread fell from 193 to 174 points, Mexico’s from 245 to 196, Colombia’s from 282 to 189 and Guatemala’s from 166 to 110. Bolivia dropped from 1,327 to 396, while Argentina declined from 829 to 514. Venezuela remained a distant outlier at 6,389 points.

The lower spread generally signals a smaller risk premium and more favorable financing conditions. But the article warns that this advantage is not permanent. Country risk also reflects fiscal, monetary, exchange-rate, institutional and external factors, making it important to preserve the conditions behind the improvement.

That task has become more difficult after the Ministry of Economy and Finance revised its fiscal path. It now projects a deficit of 3.2% of GDP in 2026 and 3.9% in 2027, with a return to the 1.5% ceiling only in 2028. By the end of July, the accumulated deficit had reached 1.2% of GDP. Total revenues rose 1.2%, while taxes linked to foreign trade fell 12.2%. Economist and former finance minister Manuel Ferreira has warned that the trajectory is creating pressure.