Paraguay: Staff Report for the 2020 Article IV Consultation—Informational Annex
Author:
International Monetary Fund. Western Hemisphere Dept.
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Publication Date:
04 Mar 2021
eISBN:
9781513570785
ISBN:
9781513570785
Language:
English
Keywords:
ISCR; CR; investment spending; supply and demand demand shock; emergency spending; compilation method; liquidity provision; PPI coverage; financial asset; producer price index statistics; bank stress testing; data ROSC; Tax administration core functions; Anti-money laundering and combating the financing of terrorism (AML/CFT); Customs administration core functions
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2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Paraguay

Abstract

2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Paraguay

Fund Relations

(As of December 30, 2020)

Article VIII

Membership Status: Joined: December 28, 1945

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Outstanding Purchases and Loans: None

Latest Financial Arrangements:

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Outright loans

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Projected Payments to Fund1

(SDR Million; based on existing use of resources and present holdings of SDRs):

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Exchange Arrangement: The de jure exchange rate arrangement is floating as Article 47 of Law No. 489/95 establishes that the exchange rate is determined by market forces. The BCP publishes information on its foreign exchange interventions on its website. The BCP intervenes occasionally in the market to smooth the effects of undue fluctuation. The BCP, as the government’s financial agent, receives U.S. dollars from the government flowing from the royalties and compensation paid by the binational hydroelectric entities and exchanges them for guaranies at the request of the government for the purpose of public expenditures. The de facto exchange rate arrangement is classified as “crawl like” under the IMF exchange rate arrangement classification system.2 Paraguay has accepted the obligations of Article VIII, Sections 2(a), 3, and 4 of the Fund’s Articles of Agreement. Its exchange system is free of restrictions and multiple currency practices on the making of payments and transfers for current international transactions.

Safeguards Assessment: The last safeguards assessment for Banco Central del Paraguay (BCP) was conducted and finalized in 2006. The Bank has not been subject to monitoring in the recent years as there was no credit outstanding. Under the RFI approved in April 2020, the authorities committed to undergoing a safeguards assessment and to: (i) provide staff with access to the central bank’s most recently completed external audit reports; (ii) authorize the central bank’s external auditors to hold discussions with staff; and (iii) establish a framework agreement between the central bank and the government on responsibilities for servicing financial obligations related to the RFI instrument. These documents have not yet been received by FIN staff. Additionally, the safeguards policy requires an update assessment to be completed before Board approval of any subsequent arrangement.

Article IV Consultation: The Executive Board concluded the 2019 Article IV consultation on April 24, 2019.

Technical Assistance 2011–20

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Resident Representative: There is currently no resident representative in Paraguay.

Relations with Other International Financial Institutions

Information on the activities of other IFIs in Paraguay can be found at: https://www.worldbank.org/en/country/paraguay https://www.iadb.org/en/countries/paraguay/overview

Statistical Issues

(As of January 19, 2021)

Assessment of Data Adequacy for Surveillance

In general, data provision to the Fund has some shortcomings, but is broadly adequate for surveillance. Paraguay has made significant improvements in the compilation and dissemination of macroeconomic statistics, but some shortcomings persist.

National accounts. National accounts with base year 2014, broadly consistent with the guidelines of the 2008 SNA, were released in 2018. The rebased GDP series disseminated currently cover national accounts data from 1991 to 2019.

Price statistics. Both the consumer (CPI) and producer price indices (PPI) are reported on a regular and timely basis. The geographic coverage of the CPI, both in terms of expenditure weights and price collection, is limited to urban households living in Greater Asunción (the capital and metropolitan area). According to metadata published on the CBP website, PPI coverage includes imported items; however, imported items are out of scope for a PPI. There is a need to review and confirm PPI compilation methods.

Government finance statistics. The government finance statistics (GFS) used for internal purposes and for reporting to WHD are broadly consistent with the recommendations of the Government Finance Statistics Manual 2001 (GFSM 2001). In early 2015, the Ministry of Finance introduced GFSM 2001 classifications and presentation for monthly budgetary central government statistics, which are published regularly on the Ministry’s website. The asset position of the social security system is available on a daily basis. Statistics of the nonfinancial public sector include data of four employer social insurance schemes, which are treated as financial corporations in the monetary and financial accounts. Data on medium- and long-term external debt are reliable and available on a monthly basis. Deficiencies remain in recording short- term supplier and commercial credit of the public sector.

Monetary and financial statistics. Paraguay reports monetary data for the central bank and other depository corporations (ODCs) using the standardized report forms (SRFs). An integrated monetary database meeting the data needs of the BCP and the Fund staff is in operation. Coverage of the ODC survey is complete, including data on credit cooperatives. The Superintendence of Banks reports 11 of the 12 core and seven of the 13 encouraged financial soundness indicators for deposit takers to STA on a monthly basis. Paraguay reports data on some key series and indicators of the Financial Access Survey (FAS), including the two indicators (commercial bank branches per 100,000 adults and ATMs per 100,000 adults) adopted by the U.N. to monitor Target 8.10 of the Sustainable Development Goals.

External sector statistics (ESS). Quarterly balance of payments and international investment position (IIP) data, which follow the recommendations of the fifth edition of the Balance of Payments Manual (BPM5), are available from 2000 onwards. The BCP needs to improve the compilation methods of some financial account components such as transactions related to intercompany lending within direct investment in the reporting economy, external deposits of the non-financial private sector, and external debt liabilities of banks as recommended by the last TA mission on ESS conducted in May 2017.

Data Standards and Quality

Paraguay became a participant in the Fund’s General Data Dissemination System (now e-GDDS) in September 25, 2001 and published a National Summary Data Page on March 2, 2017. Paraguay disseminates 14 of the 15 data categories recommended under the IMF’s enhanced General Data Dissemination System (e-GDDS) which are broadly aligned with the Table of Common Indicators Required for Surveillance, with timeliness and periodicity prescribed under the e-GDDS. Paraguay is in the process of improving the coverage for central and general government operations, the central bank and depository corporations survey, and external debt. Paraguay’s data ROSC was published on August 18, 2014.

Paraguay: Table of Common Indicators Required for Surveillance

(As of January 5, 2021)

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Any reserve assets that are pledged or otherwise encumbered should be specified separately. Also, data should comprise short-term liabilities linked to a foreign currency but settled by other means as well as the notional values of financial derivatives to pay and to receive foreign currency, including those linked to a foreign currency but settled by other means.

Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.

Central government (CG) revenue, expenditure, balance, and composition of financing data are available monthly.

The consolidated public sector consists of the central government, social security funds, state and local governments, public financial institutions, and nonfinancial public enterprises.

Debt guaranteed by the central government. Includes debt by the central administration and decentralized administration (central bank, autonomous entities, nonfinancial public enterprises, social security, and financial public institutions).

Includes external gross financial asset and liability positions vis-à-vis nonresidents.

Monthly frequencies for goods only.

Daily (D), Weekly (W), Monthly (M), Quarterly (Q), Annually (A); Irregular (I); Not Available (NA).

Reflects the assessment provided in the data ROSC published in August 2014 and based on the findings of the mission that took place during February 12–26, 2014 for the dataset corresponding to the variable in each row. The assessment indicates whether international standards concerning (respectively) concepts and definitions, scope, classification/sectorization, and basis for recording are fully observed (O), largely observed (LO), largely not observed (LNO), not observed (NO), or not available (NA).

Same as footnote 9, except referring to international standards concerning (respectively) source data, assessment of source data, statistical techniques, assessment and validation of intermediate data and statistical outputs, and revision studies.

1

When a member has overdue financial obligations outstanding for more than three months, the amount of such arrears will be shown in this section.

2

The classification criteria for exchange rate arrangement can be found in the IMF Annual Report on Exchange Arrangements and Exchange Restriction.

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Cover IMF Staff Country Reports
Paraguay: 2020 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Paraguay
Author:
International Monetary Fund. Western Hemisphere Dept.
Volume/Issue:
Volume 2021: Issue 045
Publisher:
International Monetary Fund
ISBN:
9781513570785
ISSN:
1934-7685
Pages:
74
DOI:
https://doi.org/10.5089/9781513570785.002