Paraguay: Fourth Review Under the Policy Coordination Instrument, Request for Modification of Targets, Second Review Under the Arrangement Under the Resilience and Sustainability Facility, and Request for Rephasing Access-Press Release; and Staff Report

This paper focuses on Paraguay’s Fourth Review under the Policy Coordination Instrument (PCI), Request for Modification of Targets, Second Review under the Arrangement under the Resilience and Sustainability Facility (RSF), and Request for Rephasing Access. Buoyant activity continues, reflecting high consumer confidence and expanding services and manufacturing sectors. Going forward, it would be essential to maintaining fiscal sustainability and continue with the structural reform efforts. The program performance under the PCI has been solid, underpinned by actions to preserve macroeconomic stability to enhance the country’s economic growth prospects. Progress on the climate agenda under the RSF remains strong, bolstering Paraguay's resilience to climate shocks. Stabilizing the finances of the public pension system should remain a priority. Monetary policy should continue to be guided by data when contemplating further easing. The structural reform implementation should be accelerated in promoting growth and inclusiveness specifically through reforms in labor markets, addressing a high level of informality, and improving governance and addressing corruption.