Returning to a 1.5% Fiscal Deficit in 2028 Is a Government “Dream,” Manuel Ferreira Says

Manuel Ferreira described Paraguay’s plan to return to a fiscal deficit of 1.5% of gross domestic product in 2028 as “a dream of the administration.” The former finance minister said the target is moving further out of reach as spending remains high and revenue weakens.

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Returning to the Fiscal Responsibility Law for 2028, I think, is a dream of the administration.

The government’s fiscal path was revised after the Economy and Finance Ministry dealt with accumulated arrears, mainly owed to Health Ministry suppliers and public-works contractors. Minister Óscar Lovera said the deficit would reach 3.2% of GDP this year and 3.9% in 2027, before returning to the 1.5% limit set by the Fiscal Responsibility Law in 2028.

Ferreira said that trajectory would require tax revenue to grow by 10% this year and next year. He argued that the decline in the dollar made that outcome impossible under current conditions, leaving public income further from the government’s stated goals.

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To reach a deficit of 3.2 and another of 3.9 during this year and next year, they have to make tax revenues grow by 10%.

The economist also criticized the administration for committing to targets he considers disconnected from the public accounts. “I worry when promises are made to look good, but the number is a little dreamy,” he said.

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With this fall in the dollar, that will be impossible.

Ferreira called for structural reforms to put the public finances in order, while acknowledging that such measures could carry a political cost. He said he saw little likelihood that the government would undertake them, despite considering them necessary.

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I see it as very difficult for these reforms to be undertaken, but they are the reforms that must be undertaken.