Paraguay's Finance Ministry promises increased monthly payments to construction contractors

Paraguay's Ministry of Economy and Finance (MEF) has committed to significantly boosting monthly payments to public works contractors, aiming to alleviate a substantial accumulated debt.

During a meeting with representatives from the Paraguayan Chamber of Construction (Capaco) and the Paraguayan Road Chamber (Cavialpa), Economy and Finance Minister Óscar Lovera and Public Works and Communications Minister Claudia Centurión announced that the MEF will disburse between $50 million and $100 million monthly from June until the end of the year. This increased flow of funds is intended to stabilize the debt owed to the construction sector.

Previously, monthly disbursements for certified works had hovered around $40 million, with slight increases to approximately $65 million in March and $85 million in April. The new commitment represents a substantial rise compared to the recent payment rhythm.

However, a key point of uncertainty remains regarding the fiscal implications. The MEF has not clarified whether these increased expenditures will impact the government's target of a 1.5% fiscal deficit for the year. This lack of clarity raises concerns about the sustainability of these payments and their effect on national finances.

Additionally, the MEF acknowledged that the "factoraje" mechanism, a system for transferring debt collection rights, is not suitable for the construction sector. This mechanism, recently regulated by MEF Resolution No. 296, was rejected by construction guilds due to the burden of interest payments. The ministry also confirmed that interest payments on executed contracts, totaling $110 million, will be processed once Congress approves the relevant law, which is currently pending in the Chamber of Deputies.