Inflation in Paraguay deemed temporary; wage increase challenged

RIO DE JANEIRO, BRAZIL – Former Finance Minister Manuel Ferreira, economic advisor to Paraguay’s Chamber of Advertisers, said in a press conference after a meeting with president Mario Abdo Benítez that in his opinion this is a “transitory” inflation.

In this respect, Ferreira said that a new salary increase would have a “worse” impact on employment than the impact of the increase.

The chairman of the Paraguayan Industrial Union (UIP) Enrique Duarte said that inflation is “caused by external phenomena” which nevertheless concern the business community and which were also discussed at the meeting with the president.

Abdo Benítez last June approved a 4.4% increase in the minimum wage, set at 2,286,324 guaraníes (US$337).

The government revises the minimum wage according to the variations of the Consumer Price Index presented by the Central Bank, which rose by 3.7% between June 2020 and May 2021.

BUDGET AND PANDEMIC

During the meeting, the union expressed its concern about public spending in the midst of a pandemic recovery process and the approval of the 2022 general budget.

“We are concerned that everyone wants to inflate the budget, but we must be aware that we are still in a pandemic situation and in a process of recovery,” Duarte said in reference to the amounts submitted to Congress by the different Ministries.

Duarte said that Abdo Benítez pledged to share this concern with Congress, which is in charge of approving or rejecting the budget before submitting it to the Executive.

Minister of the Presidency’s Management Unit Carmen Marín urged the search for “consensus” within fiscal sustainability and in the pandemic context.

“There is an additional expense in health that requires an effort and that must be maintained, we must put into perspective the whole discussion taking place,” the Minister said at the conference.

Hundreds of teachers today protested again in downtown Asunción demanding a 16% salary increase, as opposed to the 8% endorsed by the Ministry of Education.