Paraguay ended May as one of the countries with the lowest country risk in Latin America and the Caribbean. With an EMBI (Emerging Markets Bond Index) of 104 basis points, the country ranked third in the region, behind only Uruguay (61 points) and Chile (86 points), and ahead of larger economies such as Brazil (175), Mexico (205), and Colombia (240), according to data released by Bloomberg Línea based on the index compiled by J.P. Morgan.
The indicator reflects the perception of international markets regarding a nation's ability to meet its financial obligations. In practice, country risk measures the additional cost a government must pay to borrow relative to the United States, considered the lowest-risk issuer globally. The lower the index, the greater investor confidence and the lower the financing costs tend to be for both the state and the private sector.
Paraguay's position is largely a result of the macroeconomic stability the country has experienced in recent years. Moderate performance across economic indicators, the attainment of Investment Grade, and other factors have helped strengthen market perception, allowing Paraguay to position itself more favorably than most countries in the region.
However, the result requires a critical reading. A low country risk does not necessarily mean the economy has resolved its main structural challenges. Paraguay continues to face limitations in infrastructure, productivity, human capital, and labor informality. The EMBI measures the perception of financial solvency but does not directly reflect aspects related to economic development, the quality of public services, or the population's income level.
Part of Paraguay's strong standing is also explained by the relative deterioration of other Latin American countries. Argentina closed May with a country risk of 494 points, despite the compression observed in recent months, while Bolivia reached 576 points and Venezuela remained at extremely high levels, with 5,722 points. Ecuador also recorded a significantly higher indicator than Paraguay, at 415 points. Thus, Paraguay's position in the regional ranking reflects both its macroeconomic strengths and the difficulties facing several economies in the region.
The comparison with regional leaders also leaves room for analysis. Although Paraguay shows favorable performance, there is still a significant gap relative to Uruguay and Chile, countries that have sustained greater institutional stability, deeper financial markets, and more favorable access to international financing for decades. The difference between Paraguay's 104 points and Uruguay's 61 points shows there is still room to strengthen investor confidence.
In this context, Paraguay's challenge is to turn the financial advantage into a platform to drive higher levels of investment and growth. Maintaining one of the lowest country risks in Latin America and the Caribbean is a positive signal for the markets, but the true test will be leveraging this credibility to make progress on competitiveness, infrastructure, and productivity improvements that allow convergence toward the standards of the region's most solid economies.