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Paraguay will improve the quality of public administration with IDB support

New program for US$100 million also will help ensure macroeconomic stability

Paraguay will improve the efficiency and quality of public expenditures with support from a $100 million policy-based loan approved by the Inter-American Development Bank (IDB).

Theproject will provide support to the Paraguayan authorities for modernizing key systems and processes related to public expenditures and ensure macroeconomic stability and the proper administration of central government resources.

The financing will support reforms in government economic management and prioritization of social spending, and in the modernization of budgetary, public investment, treasury, procurement, and payroll systems.

"With this program, Paraguay will ensure its fiscal sustainability and improve efficiency in the allocation and execution of public spending that will benefit the majority of the population," said IDB project team leader Carlos Pimenta.

This is the second in a series of programmatic policy-based loans the IDB has approved for Paraguay’s Public Management Modernization Program. The first was approved in 2009.

The new funding, totaling US$100 million, consists of a loan from the IDB’s Ordinary Capitalfor US$51.6million for a 30-year term, with a grace period of six years and an interest rate based on LIBOR; a second loan from the Ordinary Capital’s Flexible Facility for US$35.5 million for a 16-year term, with a grace period nine of years and an interest rate based on LIBOR; and a third loan from the Fund for Special Operations for US$12.9 million for a 40-year term, with a grace period of 40 years and an annual interest rate of 0.25 percent.

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