MercoPress. South Atlantic News Agency

Moody's upholds Paraguay's investment grading

All quantitative fiscal targets at the end of December 2024 were met

The international rating agency Moody's on Tuesday reaffirmed Paraguay's sovereign rating at “Baa3”, maintaining a stable outlook. This rating, considered an investment grade, is the result of the South American country's strong economic performance, fiscal discipline, and institutional stability. The Baa3 rating entails lower financing costs, with better borrowing conditions in terms of interest rates and maturities.

According to Moody's, Paraguay's economy grew by a robust 5.9% in the first quarter of 2025, driven mainly by domestic demand and investment. The country also recorded a monthly fiscal surplus in May 2025, bringing its cumulative deficit down to 0.3%.

“The agency considers that this performance, together with the commitment of the authorities, constitutes a credible path to achieving the deficit target of 1.9% of GDP in 2025,” Paraguay's Economy Ministry said in a statement.

Meanwhile, Paraguay's Central Bank noted that the ratification “confirms that Paraguay continues to make progress in strengthening its institutions and sustaining responsible macroeconomic policies.”

This positive assessment confirms that Paraguay is on a credible path to meeting its fiscal targets. The country's debt-to-GDP ratio is projected to remain at levels similar to those of 2024, well below the median of regional peers with the same rating amid remarkable economic and institutional strengthening driven by recent reforms, as all quantitative fiscal targets at the end of December 2024 were met.

Moody's also highlighted that gross fixed capital formation increased by 12.7%, accumulating six consecutive quarters of positive growth. The agency considers that this performance, together with the commitment of the authorities, constitutes a credible path to achieving the deficit target of 1.9% of GDP in 2025. It also indicated that it projects that the fiscal deficit will converge towards the target of 1.5% of GDP in 2026, as per the Fiscal Responsibility Law.