Paraguay

In response to the COVID-19 pandemic, Paraguay mobilised sizeable fiscal resources, utilising its fiscal buffers, and put in place several credit support mechanisms. In the recovery period, it has increased capital expenditure above its historic average. Going forward, the country will need to rebuild fiscal buffers while building on the progress made in recent years in simplifying the tax system and setting a framework to mobilise sustainable development finance flows. This chapter examines lessons from the pandemic and recovery periods that can help Paraguay establish a comprehensive fiscal strategy and mobilise public and private resources towards a green and sustainable development path.

Paraguay did not provide the relevant information.

Paraguay has faced multiple shocks in the past five years, with severe droughts bookending the COVID-19 pandemic, and has responded with a determined effort to keep development on track. The public policy responses to the pandemic and the recovery offer valuable lessons for responding to structural challenges in the country’s development. This chapter summarises the findings of this report and presents policy priorities for an inclusive, strong and resilient future development trajectory in Paraguay.

Paraguay has faced multiple shocks in the past five years and has responded in an effort to keep development on track. The impact of the COVID-19 pandemic on the population was comparable to that of other countries in the region, with 19 289 fatalities and long lockdown periods and school closures. The economy weathered the crisis with the lowest contraction in Latin America and the Caribbean (0.8% of GDP). However, the pandemic was bookended by severe droughts which affected electricity production and the agricultural sector, leading to a contraction of 0.4% of GDP in 2019 and growth of 0.1% in 2022, as well as to temporary imbalances in the current account. Increasing food prices and heightened volatility in the markets for soft commodities following Russia’s war of aggression on Ukraine have also created an uncertain external environment for development policy in the country.

Paraguay has five tax agreements in force, as reported in its response to the Peer Review questionnaire. One of those agreements, the agreement with Uruguay, complies with the minimum standard.

Le Pakistan compte 66 conventions fiscales en vigueur, comme l’indique sa réponse au questionnaire d’examen par les pairs. Trente-huit de ces conventions sont conformes au standard minimum.

La pobreza en Paraguay disminuyó del 24.0% en 2016 al 21.1% en 2022, por debajo del promedio, 24.1%, registrado en América Latina y el Caribe (ALC). La pobreza extrema se mantuvo estable en 7.9% entre 2016 y 2022, manteniéndose por debajo del promedio de ALC (8.3%). El coeficiente de Gini descendió de 47.9 en 2016 a 42.9 en 2021 y se sitúa por debajo del promedio registrado en los países de ALC (44.8). Por lo que se refiere a los indicadores de inversión y transformación productiva, la inversión total en Paraguay aumentó del 19.1% del PIB en 2016 al 21.8% en 2022, de manera que el país se sitúa ligeramente por encima del promedio de ALC del 21.3% en el mismo período. Sin embargo, la inversión privada descendió ligeramente, del 11.1% del PIB al 10.7%, manteniéndose por debajo del promedio de ALC (15.8% en 2019). La productividad laboral de Paraguay, medida con respecto a la producción de Estados Unidos por persona empleada, disminuyó del 22.9% en 2016 al 22.0% en 2023, por debajo del promedio de ALC del 27.1% en 2023. La proporción de exportaciones de productos de alta tecnología en los bienes manufacturados exportados totales disminuyó ligeramente, del 7.6% en 2016 al 7.4% en 2021, aunque se mantiene por encima del promedio de ALC en 2021 (7.2%). Las percepciones positivas de la inversión extranjera directa (IED), que descendieron en toda la región, también lo hicieron en Paraguay, del 84.6% en 2016 al 55.4% en 2020. Los ingresos tributarios del país aumentaron del 13.4% del PIB en 2016 al 14.0% en 2021, aunque se mantienen por debajo del promedio regional de ALC (21.5% del PIB). Los ingresos tributarios ambientales se mantuvieron prácticamente sin cambios, al descender del 1.0% del PIB en 2016 al 0.9% en 2021, lo que sitúa a Paraguay en el mismo nivel que el promedio de ALC.

Poverty in Paraguay decreased from 24.0% in 2016 to 21.1% in 2022, below the Latin America and the Caribbean (LAC) average of 24.1%. Extreme poverty has remained stable at 7.9% between 2016 and 2022, but remains below the LAC average (8.3%). The Gini index decreased from 47.9 in 2016 to 42.9 in 2021 and is now below the LAC average (44.8). Regarding investment and production transformation indicators, total investment in Paraguay increased from 19.1% of GDP in 2016 to 21.8% in 2022, placing the country slightly above the LAC average of 21.3% over the same period. Private investment, however, slightly decreased, from 11.1% of GDP to 10.7%, remaining below the LAC average (15.8% in 2019). Paraguay’s labour productivity, measured against output per employed person in the United States, decreased from 22.9% in 2016 to 22.0% in 2023, below the LAC average of 27.1% in 2023. The share of exports of high-tech products in total exported manufactured goods declined marginally, from 7.6% in 2016 to 7.4% in 2021 but remains above the LAC average in 2021 (7.2%). Positive perceptions of foreign direct investment (FDI), which declined across the region, dropped in Paraguay, from 84.6% in 2016 to 55.4% in 2020. The country’s tax revenue increased from 13.4% of GDP in 2016 to 14.0% in 2021 but remains below the LAC average (21.5% of GDP). Environment-related tax revenues remained almost unchanged, declining from 1.0% of GDP in 2016 to 0.9% in 2021, positioning Panama on par with the LAC average.

Paraguay has not yet introduced a requirement for the filing of CbC reports, as required under the BEPS Action 13 (CbC reporting) minimum standard.

Paraguay has five tax agreements in force, as reported in its response to the Peer Review questionnaire. One of those agreements, the agreement with Uruguay, complies with the minimum standard.

Le Paraguay compte cinq conventions fiscales en vigueur, comme l’indique sa réponse au questionnaire d’examen par les pairs. L’une de ces conventions, celle conclue avec l’Uruguay, est conforme au standard minimum.

La pobreza en Paraguay disminuyó del 24.0% en 2016 al 22.3% en 2020, y se mantuvo por debajo del promedio, 26.3%, registrado en América Latina y el Caribe (ALC). Sin embargo, estas cifras ocultan el efecto de los sólidos esfuerzos adoptados para disminuir la pobreza antes de la pandemia de COVID-19, con los que se llegó a reducir dicha cifra hasta el 19.4% en 2019. La pobreza extrema también disminuyó de manera sistemática durante ese periodo, pasando del 7.9% al 6.0%, situándose por debajo del promedio de ALC (8.7%). La población que vive en hogares completamente informales disminuyó del 66.4% en 2009 al 58.0% en 2018, por encima del promedio de ALC del 36.3%. En lo que respecta a los indicadores medioambientales, en 2019 se registraron emisiones de gases de efecto invernadero (GEI) per cápita de 7.0 toneladas equivalentes de dióxido de carbono (t CO2e), superiores al promedio de ALC (6.3) e inferiores al promedio de los países miembros de la Organización de Cooperación y Desarrollo Económicos (OCDE) (9.1). Ese año, la proporción de población expuesta a niveles de contaminación del aire que suponen un riesgo para la salud humana (PM2.5 a más de 10 µg/m3) fue del 100%, situándose por encima del 95.4% registrado en ALC y del 61.0% en los países miembros de la OCDE. En materia fiscal, los ingresos tributarios ambientales supusieron el 0.9% del producto interno bruto (PIB) en 2020, por debajo de los promedios de ALC (1.0%) y de la OCDE (2.1%). El total de ingresos tributarios expresado como porcentaje del PIB en 2020 (13.4%) siguió siendo muy inferior a los promedios de ALC (21.9%) y de la OCDE (33.5%).

Poverty in Paraguay decreased from 24.0% in 2016 to 22.3% in 2020 and remained below the Latin American and the Caribbean (LAC) average of 26.3%. These figures mask the effect of strong efforts to decrease poverty before the shock of the COVID-19 pandemic, which brought the figure down to 19.4% in 2019. Extreme poverty consistently decreased in that period, from 7.9% to 6.0%, below the LAC average (8.7%). The population living in completely informal households decreased from 66.4% in 2009 to 58.0% in 2018 higher than the LAC average of 36.3%. Regarding environmental indicators, in 2019, greenhouse gas (GHG) emissions per capita were 7.0 tonnes of carbon dioxide equivalent (t CO2e), higher than the average for LAC (6.3) but below the average for countries belonging to the Organisation for Economic Co-operation and Development (OECD) (9.1). That year, the share of the population exposed to air pollution levels that pose risks to human health (PM2.5 at more than 10 µg/m3) was 100%, higher than 95.4% for LAC and 61.0% for the OECD. On the fiscal side, environmentally related tax revenue was 0.9% of gross domestic product (GDP) in 2020, below LAC average (1.0%) and the OECD average (2.1%). Total tax revenue as a percentage of GDP in 2020 (13.4%) remained considerably lower than the averages for LAC (21.9%) and the OECD (33.5%).

Paraguay has not yet introduced a requirement for the filing of CbC reports, as required under the BEPS Action 13 (CbC reporting) minimum standard.

Le Paraguay compte cinq conventions fiscales en vigueur, comme l’indique sa réponse au questionnaire d’examen par les pairs. L’une de ces conventions, celle conclue avec l’Uruguay, est conforme au standard minimum.

Paraguay has five tax agreements in force, as reported in its response to the Peer Review questionnaire. One of those agreements, the agreement with Uruguay, complies with the minimum standard.

El impacto económico de la pandemia de COVID-19 en el crecimiento de Paraguay fue moderado y uno de los más bajos de la región de América Latina y el Caribe (ALC), pues el producto interno bruto (PIB) solo se contrajo un 0.6% anual y la pobreza se ha mantenido invariable. A su vez, las tasas de pobreza y pobreza extrema se han mantenido (del 19.7% y el 6.2%, respectivamente, en 2020, de acuerdo con las últimas estimaciones internacionales comparables), siendo más bajas que en la región de ALC (del 30.9% y el 10.0%, respectivamente). Previo a la crisis, el gasto público en salud de Paraguay era del 6.7% del PIB, un porcentaje similar al de la región de ALC del 6.8%, pero muy inferior al 8.8% correspondiente a los países de la Organización para la Cooperación y el Desarrollo Económicos (OCDE). No obstante, en el último decenio el gasto público en salud creció dos puntos porcentuales del PIB y alcanzó el nivel de la región, que registró un ligero aumento de 0.3 puntos porcentuales. En 2020, el 38.4% de las personas se declaraban satisfechas con la calidad de la atención sanitaria, un porcentaje más bajo que en la región de ALC (48.2%) y considerablemente inferior al de la OCDE (70.7%). La calidad percibida ha disminuido más de 15 puntos porcentuales en el último decenio, frente a una reducción de casi diez puntos porcentuales en la región de ALC y un aumento de más de un punto porcentual en la OCDE. Entre marzo de 2020 y mayo de 2021, las escuelas han estado cerradas durante 32 semanas, frente a 26 semanas en la región de ALC y 15 semanas en la OCDE. En 2020, el 87.2% de los ciudadanos creían que el gobierno era corrupto, lo que supone un aumento de siete puntos porcentuales en un decenio. Los paraguayos comparten esta preocupación con otros latinoamericanos, dado que el 72.4% de las personas de la región tienen la misma percepción negativa, muchas más que en la OCDE (58.8%).

The economic impact of the crisis due to the COVID-19 pandemic on Paraguay’s growth was modest – one of the smallest in the Latin America and the Caribbean (LAC) region – as gross domestic product (GDP) contracted annually by only 0.6%. In addition, poverty has been unchanged in the last few years. The modest shock has not much affected the poverty and extreme poverty rates (19.7% and 6.2%, respectively, in 2020 based on the latest international comparable estimations), which are lower than in LAC (30.9% and 10.0%, respectively). Just before the crisis, Paraguay’s public expenditures on health stood at 6.7% of GDP, similar to LAC (6.8%) but much lower than Organisation for Economic Co-operation and Development (OECD) countries (8.8%). However, in the last decade, Paraguay made significant progress, as public expenditures on health grew by two percentage points of GDP, catching up with the region, which recorded a modest increase of 0.3 percentage points. In 2020, 38.4% of people declared being satisfied with the quality of health care, a proportion lower than in LAC (48.2%) and considerably lower than in the OECD (70.7%). The perceived quality has decreased by more than 15 percentage points in the last decade, compared to a decrease of almost ten percentage points in LAC and an increase of more than one percentage point in the OECD. Between March 2020 and May 2021, schools were fully closed for 32 weeks, compared to 26 weeks in LAC and 15 weeks in the OECD. In 2020, 87.2% of citizens thought that the government was corrupt, up by seven percentage points in a decade. Paraguayans share the concern with other Latin Americans, as 72.4% of people in the region have similar negative perceptions, much more than in the OECD (58.8%).

Paraguay does not yet have legislation in place to implement the BEPS Action 13 minimum standard.