Strong growth masks Paraguay's twin crises: currency squeeze and fiscal decay.

The guaraní has been appreciating against the dollar for months, and that trend has stopped being a statistical curiosity to become the main source of economic tension in Paraguay today: exporters under pressure, importers benefiting, the Central Bank debating whether to intervene, and a government navigating between the headlines of a macroeconomy that looks robust on paper and a fiscal reality more fragile than its own figures suggest.

The currency paradox is the connecting thread of the day. According to ABC Color, economists are warning of a dangerous "misalignment" in the exchange rate and demanding action from the Banco Central del Paraguay, while the government itself rules out intervening in the market. The weak dollar has produced a bifurcated effect: importers confirm that some products have already come down in price — a welcome disinflationary signal in a context of adjustment — but exporters, who operate in guaraníes with revenues in foreign currency, are seeing their competitiveness eroded precisely when agriculture, the main engine of the economy, needs breathing room. That distortion, warns Última Hora, threatens the economic predictability of the private sector as a whole. The question of whether the BCP will act — and when — is shaping up as the most relevant market variable in the short term.

All of this is happening while the macroeconomic data remain remarkably solid, which makes the diagnosis more complex. The Central Bank reported that economic activity grew 5.6% through July and accumulated an expansion of 5.8% through September, with the agricultural sector and services leading the momentum. In the first quarter, the economy expanded between 4.7% and 5.8% according to different BCP measurements, and retail sales are maintaining a pace above 4%. In that context, the official "war economy" slogan — coined to justify austerity measures — sits awkwardly with the growth figures, and that contradiction has not gone unnoticed. Critics, cited by ABC Color, point out that the adjustment will fall on workers while state waste persists, and that the BCP projected GDP growth of 6.6% for 2025 precisely under that "war" label.

Fiscal tension is the second major narrative of the day. Construction companies are warning of a "selective internal default," a term that refers to the State's arrears in payments to suppliers. The Ministry of Economy and Finance, which today published its September payment schedule, disbursed more than 26 billion guaraníes in the last business days, and acknowledges an accumulated debt with the private sector that is generating mounting political pressure. That pressure is visible: legislators from the ruling Colorado party have publicly called for "the head" of the Economy Minister over what they describe as a "scam" in the management of commitments with suppliers. The MEF, for its part, traveled to Paris to meet with international bodies — including the OECD — on a visit that critics call politically ill-timed amid the domestic complaints, though the government defends it as part of the financial integration agenda.

The reform of the Caja Fiscal, the pension system for public employees, is advancing in the Senate but in a version that experts describe as a "minimal reform." According to ABC Color, Senator Alliana confirmed that the text will be enacted this week with modifications, but analysts lament the missed opportunity to address what the IPS — the social security system for private-sector workers — describes as a "structural deficit" and "administrative chaos." The sustainability of the pension system is a long-term fiscal risk that the growth figures do not erase.

On the energy front, ANDE faces two simultaneous fronts: the Senate is demanding transparency on its agreement with the British company Atome — tied to green hydrogen projects — and the utility has raided an agro-industrial firm and a business for large-scale electricity theft. Paraguay is currently using around 60% of its hydroelectric capacity, according to ABC Color, which implies considerable technical headroom but also underscores the structural dependence on a resource shared with Brazil and Argentina. At Itaipú, Argentine President Javier Milei made changes to the Argentine-side representation, a move Paraguay is watching closely given the bilateral impact of the binational entity on the public finances of both countries. Itaipú also reduced its contribution to school feeding programs and municipalities by $38.7 million, a cut with direct consequences for subnational social spending.

In the labor market, the ILO warns that informality hovers around 60% — though on a downward trend — and an additional report puts the underground economy, driven by smuggling, at up to 47% of GDP by some estimates. That duality — between the Paraguay that is growing and the informal Paraguay — is precisely what the World Bank aims to address with a $300 million loan aimed at building a more resilient economy.

What to watch: the BCP's decision on possible currency intervention is the most immediate variable, with direct consequences for agro-industrial exporters and for inflation. On the fiscal front, the Senate vote on the Caja Fiscal reform this week will determine whether Paraguay takes advantage of a political window to reduce its pension liability. And in the energy sector, ANDE's response to the Senate on the Atome agreement could set a precedent on the limits of state-owned company autonomy in negotiating strategic contracts.