MercoPress. South Atlantic News Agency

New opportunity for Paraguay?

Lawyer and journalist Nicanor Duarte was sworn in this Friday as the new president of Paraguay, a country in the brink of bankruptcy undergoing a five years recession which has eroded living standards to half and plunged a fifth of the population to extreme poverty.

Mr. Duarte is the fifth elected president of the country since democracy was restored in 1989 and succeeds Luis González Macchi, an interim leader nominated by Congress following the resignation of Raúl Cubas in 1999 who was forced out of office by political turmoil and violent street rioting.

Nine Latinamerican presidents, including the most influential regionally, Mr. Nestor Kirchner from Argentina and Brazil's Mr. Luiz Inacio Lula da Silva were present at the ceremony together with Cuba's Fidel Castro and Venezuela's Hugo Chávez.

In his inaugural speech Mr. Duarte promised to mercilessly root out corruption that "permeates all layers of Paraguayan society", cut the budget deficit with austerity measures and begin immediate negotiations with multilateral credit organizations to reschedule arrears and request re-diversion of funds for a public works employment program.

According to a recent World Bank report the downturn in Paraguay has been so fierce that the economy would have to grow at least 6% a year for the rest of the decade to recover 1990 per capita income levels. Of the 5,5 million population, over a million are unemployed and in the countryside a majority of peasants survive on a dollar a day.

Budget deficit is close to 4% of GDP, public sector debt has doubled in five years becoming non payable in current circumstances.

Years of rampant corruption, profligate government spending, pillage of the Treasury and almost complete lack of structural reform over the past decade have turned Paraguay into the sick member of Mercosur.

Only a few months ago outgoing president González Macchi faced Congressional impeachment on corruption charges but the procedure was suspended to avoid a constitutional crisis and interfering with last May's electoral process, including his possible removal from office that his successor, Mr. Duarte refused to accept.

However there are also positive signs. There's a growing optimism that Mr. Duarte will break with the past and the long established legacy of the ruling Colorado Party patronizing, inefficiency and cronyism. He has support among the urban population who recognize his working class background and in the rural community where his populism and command of Guarani, Paraguay's main language outside the urban centers, have had a positive response. The latest public opinion poll published in the country's capital main newspaper indicate that between 65 and 75% feel that with the new government "the situation will improve".

Besides he has named Dionisio Borda, a highly regarded economist as head of the economic team which has impressed World Bank and IMF officials. Another clever move has been the incorporation of three members of Paraguay's Mennonite community that have created a thriving agricultural industry through religious dedication, hard work and honesty.

But much will also depend on Mr. Duarte's ability to control the splintered ruling Colorado Party in Congress and working out a political deal with the main opposition Liberal party.