Thanks to its sound and predictable macroeconomic bases; solid financial system; poverty reduction and other policies, Paraguay has seen an extraordinary growth in the past few years, paving the way to economic success with social inclusion. Read More »
Paraguay is a country with immeasurable natural wealth. The production of clean energy is one of the most relevant activities of the country, such as the highly mechanized agriculture and livestock production. Although the country is landlocked, its land is crossed in all its extension by numerous watercourses that make up the hydrographic network of the River Plate Basin, where the Guaraní Aquifer is seated, which is considered one of the largest fresh water reserves in the planet.
The Paraguayan economy is small and open, highly dependent on foreign trade, particularly soybean and beef trade which represent 50% of exports. However, the high poverty and inequality indexes continue to be important development challenges. Poverty afflicts one of three Paraguayans, while extreme poverty, one of five.
In the last decade, the country made significant advances in macroeconomic aspects, with solid results in fiscal and monetary aspects as well as important steps toward social reforms. Among the most outstanding in the past few years, free access to primary health care and basic education can be cited. An expansion of conditional money transfer programs that impact the most vulnerable populations was also achieved.
In terms of recent developments, Paraguayan economy has experienced high volatility in terms of its growth. After an economic expansion of 15% in 2011, the severe draught which took place during the first quarter of 2012 and the foot and mouth disease outbreak detected towards the end of 2011 led to an estimated drop of 0.7% of GDP in year 2012.
For this year, the GDP, in a second review, presents a positive growth rate of 13%.
The international reserve position is maintained at an historical high level of approximately US$ 5,5 billions, which corresponds to about six months of imports. The exchange rate has been stable in the past few years, with some signs of appreciation towards the end of 2012.
The Country Partnership Strategy for the years 2009-2013 will conclude in December of this year. The preparation of the new strategy for the 2014-1018 period has started and it is expected to be approved by first semester 2014.
Three basic pillars make up the Financial and Technical Assistance Program, established in the 2009-2013 strategy, which is in force.
Modernization of public administration.
Equity and opportunities for underprivileged groups.
Employment generation and sustainable economic growth
The current operation portfoliocomprises four investment projects in the areas of infrastructure, rural development, modernization of the water and sanitation sector, energy and two programmatic loans to support the public sector
The projects are:
The Road Maintenance Project, which seeks to improve the road infrastructure and maintenance management in Paraguay. The initiative, which has US$ 74 million financing, establishes a sustainable management strategy, which envisages the improvement, modernization and management of the road network through the strategic and transparent use of the scarce resources available.
With an assistance fund of US$ 37.5 millions, the Sustainable Rural Development Projecthas the objective of contributing to the improvement of the quality of life of small producers and indigenous communities in the Departments of San Pedro and Caaguazú. The initiative supports community organizations and fosters self-government in order to perfect the management of natural resources thus contributing to improve the socioeconomic conditions of the population.
The Project for the Modernization of the Water and Sanitation Sector, with a US$ 64 million fund, has the objective of improving governance of the sector as well as water and sanitation services and increase access to sewage services in the metropolitan area of Asuncion. The Project also intends to expand sustainable access to water and sanitation in rural communities.
The Project for the Strengthening of the Electric Sector, which comes up to US$ 100 millions, has the objective of increasing the quality and quantity of electricity service delivery at a national level while improving the performance of the ANDE (National Administration of Electricity).
Strengthening of the Congress’ Legislative Process. Its objective is that of strengthening the supervision capacity of the Evaluation and Follow-up Technical Unit of the Budget Management Office of the National Congress in order to monitor the quality of the formulation and execution of the annual budget as well as strengthen the function of the National Congress in terms of the formulation and dissemination of Legislation. The amount is of US$ 435.000.
In the recent past, the World Bank program in Paraguay provided support to government initiatives in two areas:
Water and Sanitation
Significant progress has been made in the provision of drinking water services to rural areas. The Fourth Water Supply and Sanitation Project, for a total amount of US$40 million, has helped the government expand water provision to rural populations. By June-2007, 300 water systems had been built and seven water supply systems had been expanded or remodeled. Sixty of these water systems are operating in indigenous communities.
In addition, nearly 25,000 latrines have been built. A key feature of this program of support is its emphasis on fostering competition in the water supply market, with five private service providers operating today, while all other rural water systems are managed by the beneficiary communities which are responsible for operation and maintenance of the systems.
The Bank is helping to solve major agricultural and natural resource problems in San Pedro and Caaguazu. It also assists small farmers and indigenous communities living in the area in the creation of sustainable and diversified agricultural production systems.
The program encourages the participation of rural communities in the management of natural resources and the appropriate use of land. To this end, the Sustainable Agriculture and Rural Development Project benefited small farmers who received training to prepare participatory micro-catchments plans. The goal is for farmers to improve productivity and adopt natural resource conservation measures.
Previously, a similar project helped 13,077 small producers in the areas of Alto Paraná and northern Itapúa.