Cerneco rejects tax increases in Paraguay and says the government should prioritize combating tax evasion, reviewing public spending and reforming the Caja Fiscal before raising taxes, citing Bendaña’s unverified claim that about 50% of business owners do not pay taxes.
Caja Fiscal
Pytagua coverage mentioning Caja Fiscal.
President Santiago Peña completes three years in government in Paraguay with economic growth, attainment of investment-grade status, and an increase in foreign investment, but faces a growing fiscal deficit, rising public debt, and structural challenges in areas such as tax collection, pension reforms, and institutional fragility.
The Paraguayan government projects a fiscal deficit of 3.9% of GDP and new debt of $600 million for 2027, a plan criticized by experts and the president of Congress as fiscally irresponsible and unsustainable without spending cuts and reforms.
Mandatory expenditures consumed 81% of tax revenues in the first half of 2026, while Moody's maintained the country's credit rating but warned that payment delays expose weaknesses in the management of public finances.
The deficit of Paraguay's Public Sector Pension Fund (Caja Fiscal) reached US$216 million in the first half of 2026, financed by the National Treasury, with the military, police, and teaching sectors being the primary contributors, while a reform approved by President Santiago Peña is considered a stopgap solution.
Spending on salaries in Paraguay's Central Administration grew 8.3% through May 2026 and now accounts for 53% of tax revenue, while tax collections rose just 1.2%, prompting the government to announce austerity measures.
The Paraguayan government enacted Decree No. 6120/2026 to implement austerity measures in 2026, but analysts warn that one-off cuts are insufficient and are calling for structural reforms in public procurement, civil service management, supplier debt, and the Caja Fiscal deficit.