Paraguay's growth masks fiscal deficits that Peña prefers to ignore publicly.

The Central Bank of Paraguay raised its 2025 GDP growth projection this week to 4.5%, but the figure that truly defines the country's economic moment is another: the 6.6% expansion already recorded so far this year, according to the BCP's own data — a pace that contrasts strikingly with the more conservative IMF estimates of 4.4%, placing Paraguay in a singular position within a region that, broadly speaking, is decelerating.

The most revealing feature of the current landscape is not growth itself — Paraguay has been classified as an upper-middle-income country by the World Bank for twelve consecutive years — but rather the growing tension between a robust economic expansion, visible in the macroeconomic aggregates, and a fiscal strain that President Peña's administration has chosen not to emphasize in its public reports. Economic activity grew 5.6% through May, driven by services and the agricultural sector, and the first quarter closed with an expansion of 5.8% according to the BCP. The soy complex contributed USD 2.492 billion in exports through May. The economic climate index compiled by the Fundação Getulio Vargas ranks Paraguay above Brazil and Argentina. And yet, the Caja Fiscal deficit reached USD 216 million at the close of the first half, interest payments on public debt rose 12.9%, and customs revenue has fallen — partly due to the effect of dollar appreciation on income projections that the DNIT already anticipates it will have to adjust for the 2027 budget.

This is the central axis of the day: a country growing solidly, attracting international capital — sovereign bonds issued between 2013 and 2026 exceed USD 9 billion, with sustained investor appetite — but carrying structural imbalances that headline growth figures tend to obscure. The new Economy Minister, Óscar Lovera, has identified spending efficiency and debt containment as his priorities. The government is working on what Lovera describes as "administrative efficiency" to keep debt service from eroding additional fiscal room, while the DNIT is advancing tax modernization through pre-filled VAT returns based on electronic invoicing data — a measure aimed at curbing evasion in a country where the shadow economy is equivalent to between 40% and 46% of GDP, depending on the estimate.

On the external front, the visit of Spain's Secretary of Commerce coincided with the ratification of the European Union–Mercosur agreement as a vector of opportunity. Madrid views Paraguay as a market with growth potential for bilateral investment, while Asunción, for its part, is demanding equal quotas for access to the European market as a condition for the agreement to deliver symmetrical benefits. Remittances, flowing primarily from Spain, Argentina, and the United States, contributed USD 732 million annually in the most recent cycle and more than USD 11.9 billion cumulatively since 2008, forming a silent underpinning of domestic consumption and the real estate market.

At the sector level, Paraguay completed its first shipment of pork to the Philippines, a sign of the ongoing diversification of its export basket. A new poultry processing plant will begin operating with 6 MVA of installed power, reinforcing the meat value chain. The Paraguayan Chamber of Construction warns that public works investment must triple to sustain the projected growth pace, while the country's economic openness stands 27 percentage points above the Latin America and Caribbean average — a differential that foreign investors, including Argentines who are looking with growing interest at Paraguay's low-tax model, continue to monitor closely.

Petropar kept fuel prices unchanged for July, ruling out both an additional cut — beyond the recent targeted adjustment to regular diesel, a consequence of the new biodiesel blend in effect since Monday — and any near-term hike. Stability at the pump is politically sensitive in a context where the "war economy" — a term now embedded in public debate to describe how households are trimming spending under cost-of-living pressures — remains a daily reference point for much of the population, regardless of what the macro aggregates indicate.

The immediate horizon will be shaped by the parliamentary handling of a package of seven economic bills, the possible passage of the Caja Fiscal reform — expected this week with modifications, according to Senate President Alliana — and the meeting between the new Minister Lovera and multilateral organizations in Paris. Managing an external debt slate that includes over USD 1.6 billion in loans currently in process, together with the decision to return to the bond market, will determine the extent to which the macroeconomic strength that the IMF acknowledges can translate into fiscal space for the public investment that the private sector is demanding as a condition for sustaining the expansionary cycle.

**Petropar (state-owned, not publicly traded)** — The state oil company confirmed that the new biodiesel blend has been in effect since Monday with no immediate impact on retail diesel prices, and also ruled out increases in July. The decision temporarily shields domestic consumption from inflationary pressure, but limits the company's room to maneuver amid rising import costs.

**Cifarma (not listed on international markets)** — The pharmaceutical chamber accepted the government's proposed debt assignment with explicit pragmatism — "something is better than nothing" — amid mounting government arrears to the sector stemming from delayed payments for medicines to the public health system. The MEF simultaneously opened a window to receive offers from creditors to manage the outstanding liabilities.