MercoPress. South Atlantic News Agency

Paraguay's economy blooming after 2021; next year looks even better

Despite all the good signs, “we must be vigilant about health and climate issues,” Llamosas warned

Paraguay's economy will close in 2021 with a growth of around 5% and good prospects for 2022, Finance Minister Oscar Llamosas announced in a radio interview.

He explained there was a 15% growth in tax collection, an improvement in economic activity and a decrease in the initial forecast of the fiscal deficit. Regarding the fiscal deficit reduction, Llamosas recalled that the initial estimate was 4% of the Gross Domestic Product (GDP), after measures taken during the coronavirus pandemic. Currently the estimate is 3.8% of GDP in the difference between income and expenditures of the State.

Llamosas based his forecasts on figures released earlier this month by Paraguay's Central Bank (BCP). But the official was also cautious and warned “we must be vigilant about health and climate issues,” that might inflkuence the actual outcome of the economic performance.

Paraguay will finish 2021 with an encouraging scenario -a 15.7% growth- for the following year after two straight years of economic decline.

Llamosas also explained tax collection had improved mainly due to a stronger economic activity, which in turn resulted in higher value added tax (VAT) figures, in addition to the income tax and the selective consumption tax (ISC). A tax reform also played a key part.

The minister also pointed out Paraguay kept its good ratings by international agencies, such as Fitch Ratings, Moody’s and Standard & Poor's, which have all highlighted the country's good overall performance despite the 2020 setback due to the COVID-19 crisis.

Regarding public spending, Llamosas insisted on the Government's commitment to retaking control of the situation in a more sustainable manner.

Llamosas was appointed Finance Minister by President Mario Abdo Benítez in late October following Benigno López's resignation.