Paraguay's fiscal deficit nears $1.7 billion, 2.6% of GDP

Paraguay's public finances show an annualized fiscal deficit of 2.6% of GDP, amounting to approximately $1.7 billion, as of July. The Ministry of Economy and Finance (MEF) reported this figure, which remains within the government's target of closing the year with a deficit of 3.2% of GDP.

The deficit for the first seven months of the year accumulated to 1.2% of GDP, or about $736 million. The operational deficit, excluding public investment, was $123.5 million. Total revenues grew by a modest 1.2% by July, primarily driven by a 2.3% increase in tax revenues. However, this growth was tempered by a 2.7% decline in non-tax revenues, largely due to reduced contributions from binational entities and currency appreciation effects.

On the expenditure side, cumulative spending rose by 9.7%. This increase was mainly attributed to higher salary expenses in strategic sectors, expanded social programs, and the settlement of outstanding obligations for medicines. Public investment reached $612.8 million, with the Ministry of Public Works and Communications (MOPC) being a significant contributor, showing a 38.9% execution increase compared to the same period in 2025.

MEF officials, including Economy Manager Nathalia Rodríguez and Director General of Macro Fiscal Policy Marcelo Rodríguez, presented the financial situation report. They highlighted that the annualized deficit reflects spending pressures against a backdrop of slower revenue growth in certain areas. Despite these figures, the ministry affirmed its projection that the fiscal deficit will conclude 2026 near the 3.2% GDP target.