Abstract
This paper assesses Paraguay’s First Review Under the Stand-By Arrangement and Request for Waiver of Nonobservance and Applicability of Performance Criteria. Paraguay has made significant progress in the first months of the program. Economic activity has strengthened, inflation prospects have improved, and renewed confidence in economic policy management has helped boost banking system deposits and central bank reserves. Fiscal performance has been favorable, but continued reforms are needed to keep the program on track. The IMF staff welcomes the authorities’ efforts to address Paraguay’s payments arrears difficulties.
Key points
Implementation of the program supported by the SBA, improved domestic political outlook, and better regional conditions have contributed to Paraguay’s ongoing economic recovery.
Structural performance criteria and all but two quantitative performance criteria for this review have been met. The deviations were of a technical nature and quickly corrected, and the authorities have taken the necessary measures to prevent their occurrence in the future.
The program has already attained important advances in fiscal consolidation, monetary stability, and structural reforms, thus, setting the ground for sustained growth and poverty reduction.
A strict implementation of the reform agenda, including improvements in governance and transparency, is considered a top priority for the Government as the key to enhanced macroeconomic performance and strengthened domestic and international confidence.