Fitch Ratings kept Paraguay’s sovereign rating at BB+ with a positive outlook, but cited about $1.3 billion in payment delays to suppliers and uncertainty over the fiscal trajectory as obstacles to achieving investment grade. The agency’s report is available on Fitch’s website.
The BB+ rating is one notch below investment grade on Fitch’s scale. Moody’s awarded Paraguay that category in 2024, and S&P Global Ratings did so in 2025; Fitch is the only one of the three major agencies that still rates the country below that level. A positive outlook signals the possibility of a future upgrade but does not change the current rating.
The agency estimates that the government’s payment delays, concentrated in obligations to pharmaceutical and construction companies, amount to about 2% of gross domestic product (GDP). Fitch links the episode to delays recorded in 2023 and breaches of the fiscal rule since 2019, which, in the agency’s assessment, have undermined the credibility of public finances.
The Fiscal Responsibility Law sets a deficit ceiling of 1.5% of GDP. The government postponed the return to that ceiling until 2028, with deficits forecast at 3.2% in 2026 and 3.9% in 2027. Fitch projects that the deficit will be around 2% of GDP in 2028, above the official target, and sees upside risks tied to social spending and public-sector wages. The agency also estimates that public debt, which fell from 37.5% to 31.7% of GDP in 2025, will rise to 34.5% by 2028.
On institutional issues, Fitch cites Paraguay’s position in the 39th percentile of the World Bank’s Worldwide Governance Indicators, associated with weaknesses in institutional capacity and the rule of law, as well as perceived corruption. The agency also considers the scope of the Caja Fiscal reform limited; it was approved in March 2026 after changes to the measures initially proposed.
Economic indicators remain a counterweight: GDP grew 6.6% in 2025, the fastest growth in Latin America that year, and Fitch projects expansion of 4.5% in 2026. The agency also highlights relatively low debt, international reserves and a diversified economy. Santiago Peña said Fitch “has its own pace and its own analysis mechanisms” and said there is no way to predict when an agency will change a rating.