Abstract
Improvements in macroeconomic conditions are encouraging, and the current macroeconomic framework for 2006 and 2007 remains valid in Paraguay. The strong fiscal performance has applied also to the rest of the public sector. The authorities have submitted a budget proposal for 2007 that preserves fiscal discipline. Monetary policy will continue to be geared toward achieving the inflation target of 7 percent in 2006. Monetary policies will aim at a further reduction of inflation for 2007. Despite the recent strengthening of the balance of payments, external vulnerabilities remain.
The Executive Board of the International Monetary Fund completed today the first review of Paraguay’s economic performance under a 27-month, SDR 65 million (about US$97 million) Stand-By Arrangement, initially approved on May 31, 2006 (see Press Release No. 06/117).
Completion of this review, which was undertaken on a lapse of time basis1, makes an amount of SDR 31 million (about US$46 million) immediately available. The authorities continue to treat the arrangement as precautionary.
The Executive Board takes decisions under its lapse of time procedure when it is agreed by the Board that a proposal can be considered without convening formal discussions.