The government of Paraguay faces significant challenges in reducing the fiscal deficit to the legal limit of 1.5% of Gross Domestic Product (GDP), as established by the Fiscal Responsibility Law (FRL). Despite a rigorous convergence plan supported by the International Monetary Fund (IMF), the accumulated deficit of the Central Administration reached ₲ 3.435 trillion (USD 527.2 million) by May, equivalent to 0.9% of GDP. When annualized, the deficit reaches 2.4% of GDP, pressured by pending payments to suppliers and reduced non-tax revenues.
Economist and former Finance Minister César Barreto states that the 1.5% target is unfeasible under current conditions. He emphasized that the National Treasury needs to honor commitments already made, including debts of approximately USD 1.5 billion with suppliers in the pharmaceutical and construction sectors. Barreto suggests that the annualized deficit should remain between 2.2% and 2.4% of GDP, even with austerity measures implemented by the Executive Branch.
The IMF considers the FRL a fundamental pillar for Paraguay's macroeconomic stability and insists on strict compliance with the rule. However, the regularization of overdue payments and the need for transparency in public accounts indicate that fiscal adjustment will take longer than expected. For Barreto, it is essential to redefine the convergence plan, recognize unrecorded liabilities, and freeze the structure of public spending to avoid new financial imbalances.