In a conference organized by the College of Graduates in Economic Sciences of Paraguay, the Minister of Economy and Finance, Carlos Fernández Valdovinos, addressed crucial topics such as the impact of Itaipú's new tariffs and the economic achievements of the national government. The minister highlighted the dynamism of the Paraguayan economy, inflation control, the financial system solidity, the progress in fiscal policy and the de-dollarization of debt.
During his speech, Fernández Valdovinos stated that the Paraguayan economy is growing close to 5%, according to the Monthly Index of Economic Activity of Paraguay (IMAEP). The growth projection for 2024 remains at 3.8%, with expectations of an upward revision by the Central Bank. “If there is no external shocks, we should have a year in which the Paraguayan economy will once again be the fastest growing in South America,” said the minister.
Regarding inflation, the minister pointed out that year-on-year inflation reached 4% in April, with an accumulation of 2.8%. He assured that for this year inflation will not be a problem, highlighting the complete normalization of monetary policy in Paraguay. He stressed that the measures adopted have made it possible to maintain a stable macroeconomic environment, contributing to the well-being of the population and the confidence of investors.
The country's financial system, according to Fernández Valdovinos, is solid and profitable, with capital levels well above legal minimums and strong credit growth. “The financial system is on the right track,” he stated, highlighting the importance of preserving this stability. The minister highlighted that financial institutions have shown remarkable resilience in the face of external challenges, thanks to prudent regulation and efficient management.
Regarding fiscal policy, the minister reported a 20% growth in year-on-year tax revenues and a historic reduction in the use of these revenues to finance salaries. The creation of the Ministry of Economy, from the merger of three institutions, generated savings of 9 million dollars this year, demonstrating an improvement in the efficiency of public spending. Fernández Valdovinos emphasized that these savings will allow the government to invest in priority areas such as infrastructure, health and education.
Fernández Valdovinos also spoke about the fiscal deficit, which is at 3.4%, and highlighted the need for a fiscal adjustment that does not harm the economic recovery. In addition, he mentioned the gradual de-dollarization of public debt and the search for innovative financing instruments, such as the IDB Climate program and collaboration with the IMF for environmental sustainability and resilience. These efforts seek not only to improve financial stability, but also to address the challenges of climate change and promote sustainable development.
Regarding the new Itaipu rates, the minister expressed his satisfaction with the achievements obtained in the negotiation, which allow the direct sale of Paraguayan energy to the Brazilian market. The first offer from the Brazilian government was 9 USD, while Paraguay managed to raise this figure to more than 22 USD, generating significant income for social investments, which will reach 650 million dollars in three years. Fernández Valdovinos stressed that this income will be used in a prudent and transparent manner. This agreement represents an important advance for the country, allowing greater autonomy and better use of its energy resources.
Finally, the minister highlighted the structural reforms carried out, such as the creation of the Ministry of Economy and Finance, the National Tax Revenue Directorate, and the Superintendence of Pensions, among others. He indicated that, although there are still reforms to be made, these measures will be fundamental for the country's economic development in the medium term. Fernández Valdovinos called for collaboration between the public and private sectors to continue promoting economic growth and improving the quality of life of all Paraguayans.