Guaraní's strength fractures Paraguay's farm lobby amid fiscal pressures.

The guaraní has emerged this week as Latin America's best-performing currency, and that FX strength is opening an unusual rift between the government and the agro-export sector that warrants immediate attention.

According to ABC Color, the Unión de Gremios de la Producción (UGP) filed a formal complaint with President Santiago Peña's economic team, warning that the dollar is falling "without a parachute" and threatening the competitiveness of the agricultural sector, the historic pillar of Paraguayan exports. The paradox is striking: the guaraní is strengthening precisely because of export dynamism, especially soy, but that same appreciation is eroding the margins of the producers who generate those FX inflows. It is the classic Dutch disease in miniature, and the Peña administration is confronting it at a politically awkward moment, with the 2027 General Budget currently under parliamentary review.

The DNIT — the new Dirección Nacional de Ingresos Tributarios, created by merging the Subsecretaría de Tributación and Aduanas, one of the Peña administration's flagship structural reforms — projects revenue growth of 14.3% in 2027, but its own budget documents flag the risk that a falling exchange rate poses to tax receipts tied to foreign trade. Óscar Orué, DNIT's director, is pushing Congress to approve the budget exactly as sent by the Ministerio de Economía y Finanzas (MEF), but exchange rate pressure adds uncertainty to those revenue projections.

The fiscal backdrop, meanwhile, looks more strained than headline growth numbers would suggest. The MEF reported that the annualized fiscal deficit reached 3% of GDP as of September, equivalent to nearly USD 2 billion, while the Caja Fiscal has already run up a deficit exceeding 43% of its annual projection. Public debt interest payments grew 12.9%, and salaries, pensions, and debt service absorb close to 70% of public financing, leaving very little fiscal room for investment. Construction firms waiting for the government to settle outstanding debts before year-end offer a concrete illustration of that pressure on the public accounts.

Against this backdrop, the Banco Central del Paraguay (BCP) is facing its own institutional turbulence. Senators are demanding the replacement of the entire board over the Ueno case, in which the bank's stake in "other companies" reportedly surged 8,000% according to data published by ABC Color — a figure that alone explains the legislative alarm. The Asociación de Bancos (Asoban) called the BCP's report on the case "incomplete" and urged guarantees of equal treatment under the law, while independent economists are pressing the central bank to adopt quick corrective measures to preserve public confidence. The tender for BNF's banking core system remains suspended, pending a ruling from the Dirección Nacional de Contrataciones Públicas (DNCP), and Santiago De Filippis's resignation from that entity's board adds another layer of institutional instability to the public financial sector.

Despite these tensions, the underlying macro data remains solid. Economic activity grew 5.7% year-to-date through August, according to the BCP, and private-sector sentiment points to a year-end print around 5%. The Bolsa de Valores de Asunción is on track for a historic record of USD 8 billion in annual turnover; savings certificates of deposit (CDAs) account for 82.64% of dollar-denominated investments; and the MEF recently placed PYG 230.527 billion in Treasury bonds in the local market, where the total stock of these instruments now stands at roughly USD 1.2 billion. ECLAC, for its part, projects a 19% expansion in Paraguayan exports for 2026, which supports the thesis that the currency's appreciation has real fundamentals behind it.

On the trade front, domestic producers completed what local media called a historic first tomato export shipment to Uruguay — a modest milestone in volume but symbolically significant for agricultural diversification. At the same time, the Ministerio de Industria y Comercio warned that Paraguay will not accept, in the Mercosur-European Union negotiations, a quota allocation that constrains its development — a stance that reflects the government's confidence in its export position but also reveals the internal frictions within the regional bloc. In energy, the possibility that Paraguay may begin importing electricity from Brazil and Argentina starting in 2030 — raised in a report from the Instituto Paraguayo del Poder del Sector Eléctrico (IPPSE) — exposes a critical structural vulnerability: the USD 18 billion invested in four hydroelectric plants would barely cover four or five years of rising demand.

The weeks ahead will hinge on three key variables: the resolution of the Ueno case and its impact on BCP governance; the MEF's response to UGP pressure on the exchange rate and whether that translates into any sterilized intervention in the market; and the progress of the 2027 PGN in Congress, where challenges to MOPC on subsidies and infrastructure works, combined with the Universidad Nacional's request for an additional USD 61 million and the rigidity of Defense spending — where 81% of the projected USD 488 million goes to personnel — set up a budget debate that will test the fiscal soundness that the Peña government presents as its main credential before investors and multilateral institutions.