The Paraguayan government accumulated $1.5 billion in debt to suppliers in 2025, and delays in payments have already caused over $200 million in extra costs. That is the assessment of economist Sergio Sapena, who criticizes the executive branch's financial management and points to three direct consequences of the arrears.
According to Sapena, the first effect is reduced money circulation and economic growth, as funds are not released on time. The second is an increase in the risk premium, which raised interest rates for businesses and families from 12% to 15%. The third is the extra cost itself: the state will have to disburse an additional $200 million on top of the original $1.5 billion.
“These are three negative pillars of this misguided financial administration, which could have been avoided if the fiscal deficit were raised to 6%,” the economist said. Currently, the deficit is capped at 1.5% of GDP by the Fiscal Responsibility Law.
So far, the government has increased payments to the Ministry of Public Works and Communications (MOPC), allocating $85 million to road construction companies — out of a total debt of over $300 million — and $100 million to pharmaceutical companies, from an accumulated liability of about $1 billion.
Sapena stresses that despite partial progress, no one assumes the real cost of the arrears, which ultimately falls on the taxpayer. He advocates relaxing the fiscal ceiling as a way to prevent further damage to state assets.