Paraguay's Export Boom Strengthens Currency, Threatening Its Own Exporters

The guaraní has hit its strongest level of the year against the dollar, trading at G. 5,740 per unit, and that figure tells you everything about the central tension defining Paraguay's economy right now: a country growing at a pace that is the envy of the region but one that, precisely because of that export-driven dynamism, is facing a currency appreciation that threatens to erode the competitiveness of the very sectors that generated the growth in the first place.

According to data reported by Última Hora, the guaraní is leading gains among Latin American currencies, propelled by strong foreign-exchange inflows from agricultural exports. ECLAC projects a 19% expansion in Paraguayan exports during 2026, and the Banco Central del Paraguay confirms cumulative growth of 5.7% through the end of August, with GDP closing 2025 at 6.6% according to BCP figures. The IMF, which has maintained an active dialogue with new Economy Minister Óscar Lovera and the BCP president during meetings in Washington and Paris, highlights the country's macroeconomic strength but warns of latent risks.

The paradox is immediate: the very export dynamism underpinning growth generates a hard-currency inflow that strengthens the guaraní, which in turn hits the producers who export. Ten production-sector guilds, including the Unión de Gremios de la Producción, have requested an urgent meeting with the Ministry of Economy and sounded the alarm on the impact of the dollar's slide on agricultural and industrial profitability. Cattle slaughter, according to ABC Color, has already fallen 21% and meatpacking plants are operating at half their installed capacity — a sign that the damage is not theoretical. The Conacom, moreover, has blown through its deadline to resolve a case involving seven meatpackers, adding regulatory uncertainty to the sector.

The MEF, for its part, has adopted a wait-and-see stance on the currency pressure, signaling that it is not yet time to intervene. That caution has a fiscal logic: the DNIT projects collecting 14.3% more in 2027 and reaching revenues of US$ 7.5 billion, but it warns that the dollar's decline is compressing collections in nominal guaraní terms, given that a sizable share of tax revenue is tied to foreign-currency transactions. The DNIT is also proposing, within the framework of the 2027 General Budget, to apply VAT to hybrid and electric vehicles and to regulate corporate profit reserves — measures that are already drawing pushback from the private sector and that have prompted the Intergremial to announce protests outside the Ministry of Economy.

The underlying fiscal picture is less luminous than the growth headlines. The MEF reported that the annualized fiscal deficit reached 3% of GDP as of September, equivalent to nearly US$ 2 billion, while the Caja Fiscal has accumulated a 43% deficit. Public spending grew 11.2% and central-government wage expenditure rose 9.9%, while debt service climbed 12.9% on interest payments. Salaries, pensions and debt absorb nearly 70% of public financing, leaving scant room for productive investment and explaining why the IDB, in its recent assessment, urged Paraguay to achieve more diversified, inclusive and sustainable growth. The institutional architecture of spending structurally limits the capacity to adjust.

Against this backdrop, Óscar Lovera's arrival at the helm of the Ministry of Economy — a ministry created just two years ago through the merger of the Ministry of Finance, the Planning Secretariat and the Public Function — marks a transitional moment. Lovera, who took office with the explicit mandate from President Santiago Peña to preserve social programs, is projecting that the budget will only be brought into line in 2028, after accumulated arrears are paid. Construction firms have already pressed him to speed up outstanding payments, and the Senate has announced it will summon him.

The banking crisis that has erupted as background noise adds another layer of complexity. Bloomberg reported that a Paraguayan bank — identified in local media as linked to the ueno-Visión merger — sought to shore up capital following the slide in its bonds. Asoban took issue with a BCP report, calling it incomplete, and pushed for immediate corrective measures without waiting for the administrative proceedings to conclude. The BCP denied having imposed recent sanctions and President Peña called for calm among depositors, but the controversy has already planted doubts about supervisory transparency that international markets will be watching closely.

On the energy front, dependence on Itaipú and Yacyretá remains the blind spot of the growth model. An IPPSE analysis warns that the US$ 18 billion that the four hydroelectric plants represent would be enough to cover only four or five years of future energy demand, while Paraguay could be forced to buy power from Brazil and Argentina starting in 2030. Large industrial consumers are already demanding clear rules through 2037. The former technical chief of Yacyretá argues that the Peña administration, having intervened in ANDE in a way the sector characterized as destructive to its autonomy, lost the political capital needed to reform the electricity sector — a reform the country needs with structural urgency.

What remains notable, in regional perspective, is the first-ever export of Paraguayan tomatoes to Uruguay, a modest but telling sign of an agricultural diversification that is advancing at a slow pace. ECLAC is encouraging that process. The IDB too. The IMF likewise. What all will be watching in the coming weeks is whether the MEF decides to intervene in the FX market, whether the DNIT manages to get its tax proposals through Congress, and whether the banking case escalates into a systemic confidence event — the only risk capable of abruptly interrupting the most sustained expansion trajectory Paraguay has recorded in decades.