IMF国际货币组织全球-Paraguay_Request-for-Purchase-Under-the-Rapid-Financing-Instrument_32页_691kb

IMF Country Report No. 20/127: Paraguay

Core Content

This document outlines the IMF's response to Paraguay's Request for Purchase under the Rapid Financing Instrument (RFI) in the context of the Covid-19 pandemic. The report details the economic impact of the pandemic, the policy measures taken by the Paraguayan authorities, and the IMF's assessment and support modalities.

Main Points

1. Context and Background

• Economic Overview: Paraguay had been experiencing a strong recovery since the 2000s, driven by agricultural commodity prices and sound macroeconomic policies.
• Pre-Pandemic Conditions: The economy had a relatively low fiscal deficit and public debt, with a poverty rate of 24% in 2018.
• Recent Challenges: In 2019, the economy faced a near-zero growth due to weather shocks and spillovers from Argentina's economic crisis.
• Covid-19 Impact: The pandemic created an urgent balance of payments (BOP) need, estimated at US$ 1.2 billion (3.2% of GDP), due to increased health and social spending, reduced output, and the collapse of the tourism and travel sectors.

2. Policy Response

• Crisis Measures: The government implemented a comprehensive emergency package to support the healthcare system, expand the social safety net, and provide emergency loans to small enterprises.
• Fiscal Adjustments: The package cost 2.5% of GDP, increasing the fiscal deficit to 4.5% of GDP in 2020.
• Monetary Policy: The Central Bank (BCP) lowered policy rates by 175 basis points to 2.25% and increased liquidity provision.
• Financial Sector Support: The BCP allowed loan restructuring, reduced reserve requirements, and eased interest rates on liquidity facilities.

3. IMF Support and Modalities

• RFI Disbursement: The IMF approved a US$ 274 million (SDR 201.4 million) emergency support, equivalent to 100% of Paraguay's quota.
• Support Justification: The disbursement is necessary to address the urgent BOP needs, preserve resources for health and social spending, and catalyze donor support.
• Access and Sustainability: Paraguay is assessed as having sustainable debt and adequate capacity to repay, even after the pandemic impact.

4. Fiscal Policy Recommendations

• Return to Fiscal Responsibility Law: The authorities should aim to return the fiscal deficit to below the 1.5% of GDP ceiling after the crisis.
• Fiscal Adjustments: To reduce the deficit in the long term, the government should moderate current expenditure growth and increase tax revenues.
• Civil Service Reform: A reform to contain the wage bill is under consideration, which includes rationalizing job descriptions and grading systems.

5. Governance and Institutional Reforms

• Corruption and Governance: A recent mission by FAD/LEG assessed vulnerabilities to corruption. The government plans to use the findings to develop a national strategy to combat corruption and improve governance.
• State Reforms: The crisis has spurred reforms across the executive, legislative, and judicial branches to improve efficiency and spending quality.
• AML/CFT Reforms: There are concerns about the effectiveness of the recently amended legal and regulatory framework for anti-money laundering and counter-terrorism financing.

6. Risks and Outlook

• Uncertainties: The duration and severity of the pandemic remain uncertain, which could affect the economic recovery.
• Potential Risks: Weather shocks, falling agricultural commodity prices, and a prolonged downturn could further impact the economy.
• Exchange Rate and Monetary Policy: The exchange rate is expected to continue acting as a shock absorber, with monetary policy focusing on inflation targeting.
• Reserve Levels: The country has sufficient reserves to cover several months of imports, but a sharp decline in reserves could risk a loss of confidence.

Key Information

• IMF Disbursement: US$ 274 million (SDR 201.4 million) under the RFI.
• Fiscal Deficit: Expected to reach 4.5% of GDP in 2020.
• Economic Impact: Real GDP growth projected at -1% in 2020, down from a pre-pandemic baseline.
• Fiscal Adjustments: The government plans to reduce the deficit to 3% in 2021, 2% in 2022, and 1.5% in 2023.
• Debt Sustainability: Paraguay is assessed as having sustainable public and external debt.
• Donor Support: The authorities are seeking additional financing from multilateral donors such as the World Bank, Inter-American Development Bank (IDB), and Development Bank of Latin America (CAF).

Summary of Economic Indicators

Conclusion

The IMF's support to Paraguay under the RFI is a critical measure to address the BOP pressures and fiscal challenges caused by the Covid-19 pandemic. The authorities have implemented timely and forceful policy responses, including fiscal stimulus, monetary easing, and financial sector support. While the country is expected to recover in the medium term, governance reforms, improved public sector efficiency, and fiscal discipline will be essential to ensure long-term macroeconomic stability.