Paraguay’s public debt reached US$21.947 billion in the first half of 2026, up 15% in 12 months, according to the data presented. The amount is equivalent to 34.4% of gross domestic product (GDP) and represents average debt of US$3,397 per inhabitant, compared with US$2,974 in the same period a year earlier.
External debt remains predominant, at US$18.332 billion, or 83.5% of the total. Its share, however, fell by four percentage points. Domestic debt rose 52.1% year on year to US$3.615 billion, equivalent to 16.5% of total debt.
Increased borrowing in the domestic market could reduce the State’s exposure to fluctuations in the dollar and contribute to the development of Paraguay’s financial market. In contrast, local interest rates tend to be higher, which could increase the Treasury’s financing costs in the coming years.
Debt service consumed US$1.551 billion during the half-year, equivalent to 7.1% of the total balance. Of that amount, 36% went exclusively toward interest payments. The pressure reduces the room in the General National Budget for infrastructure investment and other public spending.
Although the debt-to-GDP ratio remains among the lowest in the region, the pace of debt growth exceeded the expansion of the real economy. For citizens, this could mean greater competition for budget resources and less room to expand public policies if revenue does not keep pace with financial obligations.
Economy and Finance Minister Óscar Lovera announced that the executive branch will submit a new Fiscal Convergence Plan to the National Congress. The proposal calls for a deficit of 3.2% of GDP in 2026, 3.9% in 2027 and a return to 1.5% in 2028, the limit established by the Fiscal Responsibility Law.
Lovera said the review seeks to settle outstanding obligations to companies that supply the State without interrupting public investment. The minister also cited the impact of lower tax revenue, associated with an exchange rate below the level forecast in the Budget.
The Fiscal Responsibility Law allows Congress to suspend the rules for one fiscal year, at the executive branch’s request, in situations such as a national emergency, an international crisis or a decline in domestic economic activity. The exception requires the deficit to remain below 3% of GDP.