MercoPress. South Atlantic News Agency

BCP President says inflation no longer a problem

According to Carvallo, the challenge today is focused on two aspects: increasing productivity and reducing debt

Paraguayan Central Bank (BCP) President Carlos Carvallo said Friday in Luque at the Expo Paraguay Brazil convention that inflation in his country was no longer a concern. He made those remarks during his appearance at a panel titled “Inflation, currency, and macroeconomic challenges, and the BCP's strategic vision” at the event held at the South American Football Confederation's (Conmebol) headquarters.

Carvallo told attendees that Paraguay has long stood out for its macroeconomic stability. Therefore, inflation has been stabilized within the target range, “is under control and is no longer a problem.”

He also explained that, like other Central Banks, the BCP also took post-pandemic actions to reduce the inflationary effects by raising its Monetary Policy Rate (TPM) at the time, which bore fruit to later fall back to current levels (6%). ”Today, the TPM is back to equilibrium, with inflation within the target range (3.6% as of October),“ he said.

Paraguay's inflation for October stood at 0%, the BCP said. To achieve that figure, price increases in some items were neutralized by significant drops in others, specifically in the fruit and vegetable sectors. However, the food basket was reported to have gone up more than 30% in the last three years, it was observed.

”With this we tell them that there are conditions to invest in the long term, with low and controlled inflation, a solid financial system and with good solvency levels that provide that guarantee for investments,” Carvallo went on. The BCP projects the Gross Domestic Product (GDP) to grow by 4% this year, with inflation below that level.

According to Carvallo, the challenge today is focused on two aspects: increasing productivity and reducing debt, for which reason many countries are currently in the process of rebalancing their macro and fiscal policies.

The Brazil-Paraguay Expo brought together around 130 speakers from some 600 companies under the coordination of the Paraguayan Industrial Union (UIP).