IMF Executive Board Completes Reviews With Paraguay,

January 2026: The Executive Board of the International Monetary Fund (IMF) on 22nd January 2026 have completed the 06th review under the PCI arrangement and the 04th review under the Resilience and Sustainability Facility (RSF) arrangement. The Executive Board takes decisions under its lapse-of-time procedure when the Board agrees that a proposal can be considered without convening formal discussions. The completion of the reviews makes available SDR 85.6 million (about USD 117 million) to the authorities for disbursement under the RSF.

Paraguay’s economy remains resilient despite global uncertainty. Real GDP growth is expected to stay robust in 2026 and thereafter, supported by macroeconomic stability and a wide range of reforms in train supported by the PCI and RSF arrangements. Inflation is under control and is expected to reach the central bank’s target of 3.5% in 2026, justifying a data-driven approach to monetary policy. The external current account is expected to weaken short-term due to FDI-related imports but should strengthen over the medium term as new exports come on stream. Foreign reserves remain above adequacy thresholds. Risks are balanced, with weather shocks as a salient downside risk, and stronger-than-anticipated FDI as a key potential upside.

Completing the fiscal consolidation plan remains essential for maintaining macroeconomic stability. The authorities are making steady progress towards reducing the fiscal deficit to 1.5% of GDP by 2026 and remain committed to fulfilling this objective. Continuing efforts to strengthen tax collection, enhance government efficiency, and addressing the sustainability of the public pension system should help create space for development priorities while supporting fiscal consolidation goals. Efforts to improve public financial management are welcome, and sustaining momentum in this area is vital to reinforce credibility in fiscal policy implementation.

Sustaining the structural reform momentum will further underpin macroeconomic stability and foster sustainable, inclusive growth. The authorities have advanced a comprehensive reform agenda focused on strengthening governance and anti-corruption frameworks, developing domestic capital markets, improving the civil service, enhancing government efficiency and oversight, strengthening the National Directorate of Tax Revenues, enhancing the supervision and sustainability of private pension funds, facilitating private investment, safeguarding property rights, digitizing the national payment system, and bolstering resilience to natural disasters. Continued progress with structural reforms, including sustaining the implementation pace, is essential to further improve the investment climate.

Staff support completion of the sixth review under the PCI and fourth review under the RSF arrangement. The PCI remains on track to meet its objectives despite some missed targets, given compensating factors and the authorities’ policy commitments.

Based on the completion of Review Meeting 1, Review Meeting 2, and Review Meeting 3 in past reviews and Review Meeting 5 in this review, staff supports the authorities’ request for the disbursement of SDR 85.6 million, or approximately USD 117 million under the RSF.

Team Maverick.