Former Finance Minister Benigno López stated that Paraguay's tax capacity has already reached its limit, warning that pressure on taxpayers cannot increase to finance the state's growing demands. During an appearance on a streaming program, the former vice president of the Inter-American Development Bank (IDB) advocated for a deep debate on the tax system, emphasizing that any reform must be well planned and accompanied by greater efficiency in public management. "Nothing is immediate," said López, adding that governments over the last ten years face the problem of increasing spending.
López participated in a meeting convened by the Minister of Economy and Finance, Óscar Lovera, with other former holders of the portfolio, such as Germán Rojas, Manuel Ferreira, and César Barreto. The former minister considered the meeting a positive sign of openness to exchange experiences, having been surprised by the presence of the President of the Republic, Santiago Peña.
In parallel, another former Finance Minister, Óscar Llamosas, assessed as positive the decision of the Ministry of Economy and Finance (MEF) to make transparent the accumulated debts with state suppliers. However, he warned that the main challenge will be determining whether the increase in the fiscal deficit is an exceptional situation or a structural problem in public accounts.
The MEF revised its projection, estimating that the fiscal deficit will reach 3.2% of Gross Domestic Product (GDP) in 2026 and rise to 3.9% in 2027, with the goal of returning to the 1.5% limit established by the Fiscal Responsibility Law only in 2028. Llamosas considered it very complex to reduce the deficit from 3.9% to 1.5% from one year to the next.
The former minister highlighted that the current volume of pending obligations is considerably larger than that recorded in the 2023 transition, which may indicate that the General Budget of the Nation is no longer sufficient to finance all state programs. He advocated prioritizing the improvement of public spending efficiency before any discussion about tax increases. Llamosas also suggested reviewing tax exemption regimes, a tax expenditure that represents about one percentage point of GDP, as a way to strengthen revenue.
Although recognizing that Paraguay still has the lowest level of debt relative to GDP in the region, Llamosas expressed concern about the risk of the fiscal imbalance becoming permanent. To avoid the repetition of debt accumulation, he proposed modernizing the control and registration mechanisms for state commitments, revising the Financial Administration Law.