Journal Issue
Share
Article

Paraguay: Fifth Review Under the Stand-By Arrangement, and Request for Waivers of Performance Criteria Supplementary Information

Author(s):
International Monetary Fund
Published Date:
February 2006
Share
  • ShareShare
Show Summary Details

1. This supplement provides additional information on developments and performance since the issuance of the staff report for the fifth SBA review (see www.imf.org). This information does not materially change the staff appraisal but requires amending the proposed decision, as information on end-June 2005 performance criteria became available.

I. Recent Developments

2. The latest information is in line with the trends identified in the staff report.

  • Inflation pressures continued. Monthly inflation rose to 0.5 percent in July 2005, mostly due to the adjustments in administered diesel prices. The 12-month rate of inflation reached 6.4 percent in July and the accumulated inflation in the first seven months of the year reached 5.6 percent.

  • Fiscal policy remains tight. The fiscal surplus at the Treasury and consolidated public sector levels increased in the second quarter of 2005. Higher revenues and low capital expenditures are the main factors behind the improvements in the fiscal accounts. Current expenditures remain under control.

  • Monetary policy continues to be conducted in a flexible manner. The Central Bank has continued its policy of no intervention in the foreign exchange market, which started in May 2005. The guaraní has appreciated by almost 5 percent against the U.S. dollar since May 2005. International reserves continue to grow, reaching a record high of about US$1.3 billion at end-July.

II. Program Performance

3. All quantitative performance criteria for end-June 2005 have been observed. Some of them with large margins. In particular, the large fiscal margins were due in large part to under-spending on public investment. The authorities acknowledged the need to increase public investment to boost growth on a sustainable basis and expressed their intention to raise the rate of project implementation. Because the end-June 2005 data has become available, the authorities no longer request waivers of applicability of the end-June 2005 quantitative performance criteria (Table 1).

Table 1.Paraguay: Quantitative Performance Criteria
20042005
end-Mar.end-Aug.end-Dec.end-Mar.end-June
Adj.Adj.Adj.Adj.Adj.
TargetActualTargetActualTargetActualTargetActualTargetActual
Fiscal targets
1. Overall balance of the central administration (floor, in billions of guaranies) 1/2/24052343098255792105261136652
2. Wage bill of the central administration (ceiling, in billions of guaranies) 2/6506681,7911,8123,0102,9847547441,5251,509
3. Overall balance of the public sector (floor, in billions of guaranies) 1/2/2506785001,529130999174357336678
Monetary targets
4. Net international reserves (floor, in millions of U.S. dollars) 3/7731,0161,0571,1411,0591,1681,1001,1891,1751,273
5. Net domestic assets (ceiling, in billions of guaranies) 3/-2,839-4,264-4,444-5,231-3,958-4,848-4,488-5,247-5,168-5,782
Public debt and arrears targets
6. Contracting or guaranteeing of nonconcessional external debt by the NFPS (ceiling, in millions of US$) 2/500200020002001020047
7. External payments arrears of NFPS (ceiling, in millions of US$) 4/757553016
8. Of which: bilateral arrears 4/38120000
9. Central government floating debt (ceiling, in billions of guaranies) 4/2/350228297235320134
Continuous performance criteria
10. Contracted or guaranteed short-term external debt by the NFPS0000000000
11. Non-accumulation of external debt arrears 5/0B0B0B0000

As specified in the TMU (see www.imf.org), for 2005 this target will be adjusted upward by 30 percent in case of over performance in tax revenues.

Cumulative flows from the beginning of the corresponding calendar year.

NIR is adjusted upward (downward) for any increase (decrease) in reserve requirement for foreign currency deposits (above pre-specified amounts) and upward by the amount of any program disbursements. Similarly, the NDA target will be adjusted downward (upward) following the adjustment in the NIR.

These performance criteria will not apply in 2005.

B = breached.

As specified in the TMU (see www.imf.org), for 2005 this target will be adjusted upward by 30 percent in case of over performance in tax revenues.

Cumulative flows from the beginning of the corresponding calendar year.

NIR is adjusted upward (downward) for any increase (decrease) in reserve requirement for foreign currency deposits (above pre-specified amounts) and upward by the amount of any program disbursements. Similarly, the NDA target will be adjusted downward (upward) following the adjustment in the NIR.

These performance criteria will not apply in 2005.

B = breached.

Other Resources Citing This Publication