Paraguay's Public Debt Rises $1.3 Billion in Five Months

Paraguay's public debt climbed to US$21.791 billion by May 2026, marking an increase of US$1.343 billion since December 2025. This growth represents a 6.5% rise in the state's financial commitments over the five-month period. The Ministry of Economy and Finance reported these figures, noting that the expansion was influenced by currency exchange rate variations and the issuance of sovereign bonds in February.

Despite the absolute increase in debt, its proportion relative to the Gross Domestic Product (GDP) saw a reduction. By May, the debt-to-GDP ratio stood at 36.2%, down from 41% in December 2025. This apparent contradiction is explained by the strengthening of the Paraguayan Guaraní against the US dollar; the exchange rate fell from G. 6,700 per dollar in December to G. 6,100 in May, making the dollar-denominated debt relatively smaller when measured against the local currency's value.

Analyzing the composition of the debt, external obligations account for the largest share, totaling US$18.263 billion, or 83.8% of the public debt. Domestic debt amounts to US$3.428 billion, representing 26.2%. Within the external debt, loans from multilateral and bilateral organizations like the Inter-American Development Bank (IDB) and the Development Bank of Latin America (CAF) constitute 40.6% (US$8.840 billion). Another significant portion, 41.6% of external debt (US$9.067 billion), comes from the issuance of sovereign bonds in the international market, which have increased by 14% over the past year.

The government issued US$1 billion in sovereign bonds in February, entirely denominated in Guaraníes. The remaining external debt includes US$355 million from "turnkey" instruments under Law No. 5.074/2013. The Ministry of Economy and Finance previously stated that the fiscal deficit for the period remained within projected limits.