RIO DE JANEIRO, BRAZIL – Paraguay’s indebtedness at the end of January reached US$12.79 billion, which represents 35.2% of the Gross Domestic Product (GDP), and if we look at the level of South American countries, it is the lowest in the region in nominal terms.
Despite the fact that last year the country took on new debt for some US$1.99 billion to finance pandemic expenses, it ended 2020 maintaining its position as one of the countries with the lowest level of public debt.
However, if one looks at the level of commitments in terms of GDP, Paraguay is in second place, due to Chile, whose public debt totals some US$76,183 million but only represents 32.8% of its GDP.
In third place is Peru, whose commitments represent 39.5% of its GDP, and thus only three countries have a level of public debt below 40% of their GDP.
Countries such as Bolivia, Colombia, Uruguay, Ecuador, Brazil and Argentina closed last year with a high level of indebtedness, some of them exceeding 90% of their GDP.
Paraguayan Vice-Minister of Economy, Iván Haas, pointed out that although the country maintained its position of being one of the countries with a low level of indebtedness, it cannot be denied that there was a growth in debt compared to what had been taken in previous years.
He acknowledged that the debt was used to finance everything related to the pandemic, but that the rhythm that was given last year cannot continue in the future. For this reason, the Treasury Department is committed to gradually return to the fiscal rule of 1.5% of GDP.
Haas assured that this commitment necessarily implies a reduction of debt expenditures, current expenditures and taking care of fiscal expenditures.
“This year we committed to reduce the deficit to 4% of GDP, and in 2024 to reach 1.5%. This trajectory to which we committed is the one that forces us to slow down the pace of indebtedness,” he said.
However, he clarified that the indebtedness will continue but at a slower pace since there are works that are being financed with loans that were already taken previously and that have an inertia of execution in an average of four or five years.
On the other hand, the Vice-Minister commented that if we look at some indicators, Paraguay came out of the pandemic well, since it had the smallest drop in its GDP. “But far from considering that number as a pride, a victory, the only thing it tells us is that the measures that were implemented last year were able to cushion a greater fall,” he said.
Finally, he assured that no new debt is currently being considered to finance Health expenses and that the instruction is to look within the budget and analyze what reallocations can be made.
Source: La Republica