Paraguay's Wage Bill Grows 7.7%, Absorbing 53% of Tax Revenue

Wage spending by Paraguay's central government has continued its upward trend, growing by 7.7% year-on-year to July 2026. This persistent increase in rigid expenses means that salaries now absorb 53% of the government's tax revenue, according to the Ministry of Economy and Finance's (MEF) financial situation report (Situfin) for July.

Total revenue for the central administration reached G. 32.20 trillion (approximately US$5.368 billion) by the end of July, a modest 1.1% increase from the same period last year. Tax revenues saw a slightly larger year-on-year jump of 2.2%, totaling G. 25.51 trillion (US$4.252 billion). However, overall central administration expenses rose by 9.7% compared to the first seven months of 2025, reaching G. 33.08 trillion (US$5.513 billion).

Within this total expenditure, remuneration paid to public employees between January and July amounted to G. 13.73 trillion (US$2.288 billion). This represents a 7.7% increase from the G. 12.73 trillion paid during the same period in 2025. The MEF report attributes this rise primarily to wage increases in the Ministries of Public Health, Education and Sciences, Interior, and the Judiciary. These increases are due to both minimum wage adjustments and an expansion of personnel.

The report highlights that the G. 13.73 trillion allocated to salaries constitutes 53% of the period's tax revenue. This means that for every G. 100 collected in taxes, G. 53 are spent on public sector salaries. Social benefits also saw a significant increase, rising by 15% over the same period.