MercoPress. South Atlantic News Agency

Fitch improves Paraguay's grading, but still short of investment status

“Paraguay continues to demonstrate its strength,” Peña stressed

Fitch Ratings upgraded Paraguay's risk outlook on Monday from “Stable” to “Positive,” moving the country closer to achieving an investment-grade rating from the agency, although the overall grading remained at BB+.

The rating agency based its revision on the South American country's solid macroeconomic performance and growth prospects, citing a strong investment portfolio, a low fiscal deficit, an expected decline in public debt, and planned economic reforms.

President Santiago Peña celebrated the decision, viewing it as recognition of the country's “excellent performance and credible and sustainable public policies” after the outlook had remained “Stable” for seven years. “Paraguay continues to demonstrate its strength,” Peña stressed. “Fitch Ratings has improved our country's outlook to Positive, highlighting our growth, stability, and commitment to reforms,” he added.

Fitch projects robust economic growth of 4.8% in 2025, following 4.2% in 2024, it was also announced. However, it also highlighted weak governance indicators as the main constraint, noting that a lack of institutionality poses a risk to investments. Other limitations include a low revenue base, a shallow local capital market, and vulnerability to adverse climate shocks, though mitigated by greater economic diversification.

In this scenario, Moody's remained the only major agency to grant Paraguay an investment-grade rating (Baa3).