Paraguay

Paraguay's per capita income increased by an average of 2.4 percent from 2004 to 2024, a rate faster than most of its regional peers. The country is rich in natural resources and is a significant global exporter of soybeans, beef, and other agricultural commodities. Despite being landlocked, Paraguay generates a surplus of hydropower through dams that it shares with Brazil and Argentina.

In 2025, Paraguay’s real GDP growth reached 6.6 percent, exceeding expectations and surpassing the January 2026 estimate of 5.5 percent, driven by robust private consumption and investment. The average GDP growth for the period 2026–2028 is projected at 4.3%, an upward adjustment that reflects stronger-than-expected domestic demand and sustained economic momentum, positioning Paraguay as one of the most dynamic economies in the region.

Paraguay has not experienced significant macroeconomic imbalances for the past two decades, mainly due to prudent macroeconomic management. While the COVID-19 pandemic increased the budget deficit and public debt, the authorities have embarked on a fiscal consolidation process, reducing the deficit from 4.1 percent of GDP in 2023 to 2.0 percent in 2025. This prudent fiscal management has resulted in public debt reaching 41.3 percent of GDP in 2025, remaining among the lowest levels in Latin America and the Caribbean.

However, Paraguay faces the challenge of improving the quality and quantity of spending on essential public services and infrastructure, which are critical for creating better job opportunities. Approximately 62 percent of the workforce is engaged in informal employment, disproportionately affecting women and young people.

Development

The World Bank is a strategic development partner for Paraguay, providing over 70 years of financing, knowledge, analysis, and technical assistance. The current portfolio, totaling US$545.3 million across five investment projects, actively supports Paraguay’s human capital agenda, infrastructure, agricultural markets, and sustainable development.

Key projects include:

• Public Health Sector Strengthening (US$115M) to expand access to quality primary healthcare.

• Agricultural Market Insertion (US$100M) to improve market access for farmers and Indigenous communities.

• Transport Connectivity (US$100M) to reduce transport costs and enhance road safety.

• Urban Resilience in Asunción’s Coastal Strip (US$105M) for sustainable urban transformation.

• Education Excellence (US$125.3M) to improve learning environments and educational governance.

The Board of Executive Directors recently approved the Paraguay Private Sector-Led Growth and Jobs Development Policy Loan (DPL) (US$150M) to support efforts to improve the business environment, increase private investment, and foster job creation. As of April 2026, this operation is currently pending Congressional approval.

Beyond direct investment, the Multilateral Investment Guarantee Agency (MIGA) provides US$113.4 million in financial sector guarantees, and the International Finance Corporation (IFC) manages a US$467 million portfolio across six private sector projects. The World Bank also provides technical assistance to the government and engages in strategic dialogue in a range of areas including public debt management and fiscal policy, competition policy, poverty reduction, renewable energy, urban mobility, and anti-corruption.

The CPF is structured around three core pillars:

1. Promoting accountable institutions and improving the business environment.
2. Reducing volatility, enhancing natural capital management, and supporting the rural economy.
3. Strengthening human capital.

Expected outcomes from this partnership include empowering small farmers to access markets, increasing resilience to climate events, ensuring universal access to primary healthcare for vulnerable populations, and improving the management of public spending in social development. Additionally, the framework incorporates the International Finance Corporation's (IFC) specialized financial products and advisory services to foster private sector development and leverages the Multilateral Investment Guarantee Agency's (MIGA) role in attracting more foreign investment to the country.