Paraguay to Spur Economic Recovery and Fiscal Sustainability with IDB Support

Paraguay will buoy its post-pandemic economy recovery and fiscal sustainability through a $250 million loan from the Inter-American Development Bank (IDB) for more effective and efficient public policies and public resource management.

This operation is the second of two contractually independent but technically linked loans for policy reform to support Paraguay during and after the pandemic. The first $210 million loan was approved in 2020.

The new operation supports the country's ongoing reforms to build health capacity, accelerate social inclusion for poor and vulnerable people, and promote a sustainable post-pandemic fiscal and economic recovery.

The program also aims to enhance public resource availability and streamline spending to address the impact of the health crisis and strengthen countercyclical fiscal policy effects with temporary measures to protect the income of vulnerable households and the liquidity of micro, small and medium enterprises.

This operation aligns with the IDB’s Vision 2025 - Reinvesting in the Americas: A Decade of Opportunities, which lays out a path to achieving recovery and inclusive growth in Latin America and the Caribbean. It especially contributes to the pillars of micro, small and medium enterprises, digital economy, gender and inclusion, and climate change.

The $250 million loan has a 20-year term, a five-and-a-half-year grace period, and an interest rate based on SOFR