Paraguay Overview

LENDING

Paraguay: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments

Context

Paraguay is a country with many natural resources. The production of clean energy is one of the most important activities in the country, as well as the highly mechanized agriculture and livestock production. Numerous streams that form the river network of the River Plate Basin, where the Guarani Aquifer, considered one of the largest reserves of fresh water on the planet is located, cross the territory in its entirety.

 The Paraguayan economy is small and open, highly dependent on foreign trade, particularly soy and beef accounting for nearly 50% of exports. However, high levels of poverty and inequality remain major challenges of development. Poverty affects one in three Paraguayans, while extreme poverty, one in five.

In the last decade, the country has made significant progress in the macroeconomic front, with strong results in fiscal and monetary aspects and with the onset of major social reforms. Among the most striking in recent years, are free access to primary health care and basic education, and the expansion of conditional cash transfer programs with impact on the most vulnerable populations.

 In terms of recent development, the Paraguayan economy has experienced high volatility in growth. After an economic expansion of 4.3% in 2011, the severe drought in the first quarter of 2012 and the outbreak of foot and mouth disease in late 2012 influenced a decline in Gross Domestic Product (GDP) close to 1.2% for the year.

Preliminary reports show a GDP growth estimated at 13.6% for 2013, and predicts that in 2014 economic growth will go back to its trend of the last decade of an average of 4.8%.

 The international reserves position remains at a historically high level with approximately U.S. $ 5.875 million at the end of 2013, corresponding to just over six months of imports. The exchange rate has remained stable in recent years, with a slight tendency to depreciate in 2014.

For more data on Paraguay, visit World Bank's Open Data site.

Last Updated: Apr 09, 2014
Strategy

The financial and technical assistance programs currently in force focus on three pillars:

  • Modernization of public administration
  • Equity and opportunities for disadvantaged groups
  • Job creation and sustainable economic growth.

The World Bank and the Government of Paraguay are currently working together to define the guidelines of the new Partnership Strategy for the period 2014-2018.

The current portfolio of operations includes five investment projects in the areas of infrastructure, rural development, modernization of the water and sanitation sector, energy and two programmatic loans to support the public sector.

The projects are:

With an assistance fund of $ 37.5 million, the  Sustainable Rural Development Project  aims to contribute to improve the quality of life of small farmers and indigenous communities in the departments of San Pedro and Caaguazú. The initiative supports community organizations and encourages self-government to improve the management of natural resources, contributing to improve the socioeconomic conditions of the population.

In December 2013, the Board approved additional funding of $ 100 million, which will expand the coverage of the project to the departments of Canindeyú, Caazapá and Concepción. Additional funding is pending approval by the National Congress.

The Road Maintenance Project, which seeks to improve the road infrastructure and maintenance management in Paraguay. The initiative, which has US$ 74 million financing, establishes a sustainable management strategy, which envisages the improvement, modernization and management of the road network through the strategic and transparent use of the scarce resources available.

With an assistance fund of US$ 37.5 millions, the Sustainable Rural Development Project has the objective of contributing to the improvement of the quality of life of small producers and indigenous communities in the Departments of San Pedro and Caaguazú. The initiative supports community organizations and fosters self-government in order to perfect the management of natural resources thus contributing to improve the socioeconomic conditions of the population.

The Project for the Modernization of the Water and Sanitation Sector, with a US$ 64 million fund, has the objective of improving governance of the sector as well as water and sanitation services and increase access to sewage services in the metropolitan area of Asuncion. The Project also intends to expand sustainable access to water and sanitation in rural communities.

The Project for the Strengthening of the Electric Sector, which comes up to US$ 100 millions, has the objective of increasing the quality and quantity of electricity service delivery at a national level while improving the performance of the ANDE (National Administration of Electricity).

With US$ 100 million available, the Project for the Support of Policies for the Development of the Public Sector has the objective of decreasing the impact of the world economic crisis as well as improving the functioning of the State.

The Loan for the Support of Development Policies and Reform Implementation, of US$ 100 millions, supports the governments’ reform program which aims to increase the public sector efficiency by improving the supervision of state owned enterprises and internal financial control, and strengthening of the tax system.

Additionally, Paraguay has received through the World Bank three donations for the following areas:

Biodiversity Conservation and Sustainable Management of Land in the Eastern Atlantic Forest of Paraguay, which has the objective of helping the country’s efforts in achieving sustainable economic development based in natural resources in the area of the project. This donation is of US$ 4.5 millions.

Strengthening of the Republic Comptroller General’s Office that has the objective of increasing the effectiveness and credibility of the entity through the improvement of its audit methodology. This donation is of US$ 330.000

Strengthening of the Congress’ Legislative Process. Its objective is that of strengthening the supervision capacity of the Evaluation and Follow-up Technical Unit of the Budget Management Office of the National Congress in order to monitor the quality of the formulation and execution of the annual budget as well as strengthen the function of the National Congress in terms of the formulation and dissemination of Legislation. The amount is of US$ 435.000.

Last Updated: Apr 09, 2014
Results

In the recent past, the World Bank program in Paraguay provided support to government initiatives in two areas:

Water and Sanitation

Significant progress has been made in the provision of drinking water services to rural areas. The Fourth Water Supply and Sanitation Project, for a total amount of US$40 million, has helped the government expand water provision to rural populations. By June-2007, 300 water systems had been built and seven water supply systems had been expanded or remodeled. Sixty of these water systems are operating in indigenous communities.

In addition, nearly 25,000 latrines have been built. A key feature of this program of support is its emphasis on fostering competition in the water supply market, with five private service providers operating today, while all other rural water systems are managed by the beneficiary communities which are responsible for operation and maintenance of the systems.

Rural Development

The Bank is helping to solve major agricultural and natural resource problems in San Pedro and Caaguazu. It also assists small farmers and indigenous communities living in the area in the creation of sustainable and diversified agricultural production systems.

The program encourages the participation of rural communities in the management of natural resources and the appropriate use of land. To this end, the Sustainable Agriculture and Rural Development Project benefited small farmers who received training to prepare participatory micro-catchments plans. The goal is for farmers to improve productivity and adopt natural resource conservation measures.

Previously, a similar project helped 13,077 small producers in the areas of Alto Paraná and northern Itapúa.

Last Updated: Apr 09, 2014

LENDING

Paraguay: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments