With nearly 7 million inhabitants, Paraguay is a country of vast natural resources. It is crisscrossed by several rivers that form the River Plate Basin, enabling clean energy to be produced by the binational hydroelectric plants of Itaipú and Yacyretá, a leading economic activity in the country. Other key activities include highly automated agriculture and livestock production.

The Paraguayan economy is small and open, with an average growth rate of 5% over the past decade, despite the volatility of that period. This growth has been based mainly on the heavy dependence on agricultural production and foreign trade, particularly soybean and beef, which comprised 38% of exports in the first eight months of 2015.

Hydroelectric energy production has fluctuated in response to changing climate conditions and the course of the Paraná River. This affected electric power exports, which together with beef and soybean, accounted for nearly 62% of all Paraguayan exports in August 2015.

In June, the Central Bank of Paraguay adjusted economic growth forecasts downward for 2015, to approximately 4.0% annually rather than the 4.5% originally estimated. This reduction mainly reflects the decline in international commodity prices, which directly affects the value of Paraguayan exports. Another contributing factor is the lower volume of beef and electric power production due to adverse weather conditions, in addition to the fall in re-exports to Brazil given that country’s currency devaluation and increased border controls. Moreover, China and Latin America are experiencing an economic slowdown and growth forecasts for many countries in the region are now lower than they were six months ago.

Although economic growth is expected to approach its potential (between 4% and 5%), the deceleration of emerging economies and the less dynamic regional performance pose major challenges for the Paraguayan economy in the coming years. The weight of Brazil and Argentina in Paraguayan exports (totalling 39% in August 2015) and foreign direct investment in the country could have a significant impact on growth.

Over the past decade, the country has made significant progress on the macroeconomic front to address these challenges with the implementation of major social reforms.  For example, international reserves continue at historically high levels, totaling more than US$ 6.8 billion in late August 2015. Noteworthy social reforms include free access to primary health care and basic education and the expansion of conditional cash transfer programs to benefit vulnerable populations.

Nevertheless, high levels of poverty and inequality remain significant development challenges. Although poverty rates have declined over the past decade, especially since 2011, one in four Paraguayans is still poor while one in 10 is extremely poor.

In response to the country’s economic and social challenges, the government prepared the first National Development Plan for the period 2014-2030 in an effort to eliminate extreme poverty and promote the income growth of the poorest 40% of the population.

The National Development Plan is organized around three pillars: i) poverty reduction and social development; ii) inclusive economic growth; and iii) Paraguay’s inclusion in global markets. It also supports a medium-term economic framework emphasizing sustainable fiscal policies; improved tax collection; increased effectiveness of social protection policies and their targeting; and broader financial inclusion.

In September 2015, the Law of Public Information Access was enacted. This important instrument was the result of collaborative efforts between the government and civil society.

Last Updated: Sep 30, 2015

The World Bank Group and the Government of Paraguay agreed on a new Country Partnership Strategy for 2015-2018. This strategy supports the country’s efforts to reduce extreme poverty to 9% and promote the growth of income of the poorest 40% of the population.

Financial and technical assistance and knowledge-sharing programs focus on three pillars:

  • Strengthening of resilience to risks and volatility.
  • Promotion of the provision of goods and services to the poorest citizens.
  • Promotion of inclusive markets.

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

These projects are:

With financing for US$ 137.5 million, the Sustainable Rural Development Project aims to contribute to improving the quality of life of small farmers and indigenous communities in the departments of San Pedro, Caaguazú, Canindeyú, Caazapá and Concepción. The initiative supports community organizations and encourages self-governance to enhance natural resource management in an effort to improve the population’s socioeconomic conditions.

The Road Maintenance Project seeks to improve road infrastructure and maintenance in the country. The US$ 74-million initiative implements a sustainable management strategy for the improvement, modernization and management of the road network through the strategic, transparent use of limited available resources.

The Project to Modernize the Water and Sanitation Sector, with funding for US$ 64 million, aims to improve sector management and water and sanitation services, as well as to increase access to sanitation services in Metropolitan Asunción.  The project also works to expand sustainable access to water and sanitation in rural communities.

With US$ 100 million in funding, the Project to Support Development Policies of the Public Administration seeks to mitigate the impact of the global economic crisis as well as to improve the functioning of the government administration.

The US$ 100 million Project to Support Development Policies and Implement Reforms  supports the government’s reform program, which is designed to increase public sector efficiency through improved oversight of state companies and internal financial controls, as well as to strengthen the tax system.

Additionally, Paraguay has received four grants through the World Bank for the following:

Social accountability of the Tekoporá Program: the Development Information and Resource Center (CIRD) will implement this program, with support from the World Bank and the Global Partnership for Social Accountability (GPSA). The program is a key initiative of the new 2015-2018 Country Partnership Strategy, whose objectives include improved social accountability through citizen empowerment for increased oversight of public service delivery. The main goal of the US$ 600,000 grant is to strengthen the voice of participants of the Tekoporá Program to improve the program’s effectiveness and efficiency as well as to promote citizen oversight of program activities and results.

Biodiversity Conservation and Sustainable Management of Paraguay’s Eastern Atlantic Forest, which seeks to support the country in achieving sustainable economic development based on natural resources in the project area. This grant is for US$ 4.5 million.

Strengthening of the Comptroller General’s Office: The objective of this project is to increase the effectiveness and credibility of the office by improving its auditing system. This grant is for US$ 330,000.

Strengthening of the Legislative Process: The objective of this project is to strengthen the oversight capacity of the Monitoring and Evaluation Unit of the Budget Management Office of the National Congress to monitor the quality of annual budget allocations and spending, as well as to strengthen the capacity of the Congress to develop and disseminate legislation.  This grant is for US$ 435,000. 

Last Updated: Oct 09, 2014

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


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

*Amounts include IBRD and IDA commitments