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Montevideo, September 25th 2021 - 22:21 UTC

 

 

Paraguay stays “Ba1” according to Moody’s risk rating scale

Monday, August 2nd 2021 - 08:13 UTC
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Paraguay's Central Bank also showed promising figures for the country's economy Paraguay's Central Bank also showed promising figures for the country's economy

The risk assessment agency Moody's continued to give Paraguay a stable “Ba1” rating at the end of July, despite the current shaky coronavirus economic scenario.

The agency has highlighted Paraguay's credit strengths, such as its low public debt burden both in absolute and relative terms despite a 35% increase in Gross Domestic Product (GDP) last year driven by the government's counter-cyclical policy response to the pandemic.

Moody’s also pointed out that the contraction in Paraguay's economy during 2020 was the least severe in Latin America and the Caribbean, thanks to a fiscal stimulus of 5.5% of its GDP, which was a consequence of the National Emergency Law passed to neutralize the impact of sanitary measures.

Paraguay's public investment boosted the economic recovery during the second half of 2020, according to the Ministry of Finance.

Moody's also underlined Paraguay's real GDP 0.6% growth yoy in the first quarter of 2021, making it one of the first Latin American economies to exceed pre-pandemic levels.

In this scenario, the agency expects “the Paraguayan economy to grow by 3.5% in 2021” and that by 2022, “growth will accelerate to 4%, which exceeds the regional average growth of 3.5%” with a fiscal definit around 4.0% of GDP.

Moody's has also praied Paraguay's Fiscal Responsibility Law, which has nevertheless allowed for an increase in capital spending overtime, in line with the Government's public investment within its post-pandemic economic recovery plan.

In June 2021, the Government has submitted to Congress the Economic Consolidation and Social Containment Law bill, which would regulate health expenditures and social support once it is approved, which is expected to happen before the end of the year 2021.

Paraguay has managed to maintain its credit rating and stable outlook with rating agencies such as Moody's and Standard & Poor's in 2021.

Meanwhile, Paraguayan Central Bank (BCP) President José Cantero has announced that economic recovery was underway, according to new data. The new, revised BCP projections have upped the GDP from 3.5% to 4.5% as a result to a more synamic post-pandemic economy and despite recent low temperatures which have taken their toll on agrifood outputs.

The sectors with the greatest growth prospects for 2021 are construction, with 14%; livestock with 12%; trade 9.5% and manufacturing 8.5%, the BCP reported.

Cantero pointed out that frosts and low temperatures registered in recent weeks have led to a decrease outlook for agriculture of -7%. However, the sum of all sectors leads to a total growth of around 4.5%, slightly above Moody's estimates.

Categories: Economy, Politics, Paraguay.

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  • Michael F

    Now if only Paraguay would “fix” the Guarani as a currency. Even 10 or so years after the initial proposal still no action, as we still see exchange rates for the US dollar in the 6200-6900 range over the past year. Today's rate rather similar to its rate 1 year ago. No modern currency of a stable nation should allow its currency to be considered so worthless

    Aug 02nd, 2021 - 01:51 pm 0
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