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🇵🇾 Paraguay /Economy & Trade

Returning to a 1.5% deficit in 2028 requires a fiscal plan now, economist says

From ABC Color · () Spanish

Translated from Spanish and summarized by DistantNews. Read the original for the full story.

At a glance

Analysis Named sources New plan
  • Paraguay’s proposed 2027 budget would raise the fiscal deficit to 3.9% of GDP before targeting a return to the 1.5% legal limit in 2028.
  • Economist Robert Soto said the government and Congress need a measurable fiscal roadmap, verifiable targets and firm spending controls.
  • The proposed budget totals 166.3 trillion guaraníes, with official projections for 4.2% GDP growth and 3.5% inflation.

Paraguay’s proposed 2027 budget will temporarily push the fiscal deficit to 3.9% of GDP, while the government aims to return to the 1.5% limit in 2028. Economist Robert Soto says that return requires a clear plan starting now.

“The credibility of fiscal policy will depend on concrete measures, verifiable deadlines and control over the evolution of spending and debt,” Soto told ABC Color. He urged the Executive and Congress to support the exceptional measure with a clear roadmap, measurable goals and strict control of public spending.

The budget proposal, presented to Congress this week by Economy Minister Óscar Lovera, totals 166.3 trillion guaraníes, or about $25.75 billion. Official projections include GDP growth of 4.2%, nominal GDP of 433 trillion guaraníes, inflation of 3.5%, an exchange rate of 6,458 guaraníes per dollar and an 8.6% increase in tax revenue compared with 2026 estimates.

The credibility of fiscal policy will depend on concrete measures, verifiable deadlines and control over the evolution of spending and debt.

· Robert SotoThe economist said Paraguay needs a detailed roadmap to return to the fiscal deficit limit.

Soto said the budget could address real obligations, including payments owed to health suppliers, public works contractors and other creditors. Including those obligations would provide a more accurate picture of the government’s finances, he said. But he warned that a temporary exception could become permanent.

“The real test for the 2027 budget will not be the size of the exceptional deficit, but the ability to show that this exception will not become a new rule,” Soto said. He added that the debate should establish whether the accumulated obligations reflect an extraordinary situation and whether mechanisms exist to prevent new arrears. The International Monetary Fund recognizes the need to settle those commitments but calls for a return to compliance with the Fiscal Responsibility Law and improved financial management.

The real test for the 2027 budget will not be the size of the exceptional deficit, but the ability to show that this exception will not become a new rule.

· Robert SotoSoto warned that the temporary deficit must not turn into a permanent departure from the fiscal rule.
About this summary

Originally published by ABC Color in Spanish. Translated, summarized, and contextualized automatically by DistantNews, with a note on how the source frames the story. Not individually reviewed before publishing. How this works.

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