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Paraguay economy at a glance: central bank, inflation target, fiscal rule and key figures
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Last verified: 2026-10-27 · Status: Changing
Paraguay's Constitution creates a technical central bank with the sole right to issue money and bars it from financing public spending outside the budget; its charter makes the stability of the guaraní its first objective. The Banco Central del Paraguay targets 3.5 percent inflation within a 1.5 to 5.5 percent band; the policy rate has been 5.50 percent since February 2026 and 12 month inflation was 1.6 percent in July 2026. The 2013 fiscal responsibility law caps the Central Administration deficit at 1.5 percent of GDP, but the Ministry of Economy now projects 3.2 percent for 2026 and 3.9 percent for 2027 while it clears arrears, returning to the 1.5 percent limit in 2028, with Central Administration debt at 36.1 percent of GDP at the end of 2025 and two investment grade ratings.
USD figures use PYG 5,847.90 per US dollar, the Banco Central del Paraguay reference quotation for 27 October 2026, retrieved on the verification date. The end of 2024 comparison rate of PYG 7,810.24 is the end of period rate in the Ministry of Economy and Finance (MEF) Panorama Macroeconómico indicator table. Conversions are for orientation only.
Key facts
| BCP monetary policy rate (TPM), unchanged since February 2026 | 5.5 %BCP Monetary Policy Committee, July 2026 meeting (MEF Panorama Macroeconómico, July 2026), as of 2026-07-31 · in force |
|---|---|
| BCP inflation target (18 to 24 month horizon) | 3.5 %BCP Board decision, December 2024, as of 2024-12-19 · in force |
| Inflation target tolerance band | 1.5 to 5.5 %BCP Board decision, December 2024 (target plus or minus 2 points), as of 2024-12-19 · in force |
| CPI inflation, 12 months to July 2026 | 1.6 %BCP CPI, cited in MEF Panorama Macroeconómico, July 2026, as of 2026-07-31 · in force |
| CPI inflation, December 2025 over December 2024 | 3.1 %MEF, Informe de las Finanzas Públicas 2026, section 1.2.3, as of 2025-12-31 · in force |
| Real GDP growth, 2025 | 6.6 %MEF, Informe de las Finanzas Públicas 2026, as of 2026-10-23 · in force |
| Real GDP growth forecast for 2026 (MEF updated scenario) | 4.5 %MEF, Informe de las Finanzas Públicas 2026, as of 2026-10-23 · pending |
| Nominal GDP projected for 2026 | 56456.41 USD millionMEF Panorama Macroeconómico, July 2026, Indicadores Económicos 2022 to 2026, as of 2026-07-31 · pending |
| Legal cap on the Central Administration deficit in each budget law | 1.5 % of GDPLey Nº 5098/2013 art. 7 numeral 1, as of 2013-10-31 · in force |
| Maximum deficit when Congress suspends the fiscal rule | 3 % of GDPLey Nº 5098/2013 art. 11, as of 2013-10-31 · in force |
| Central Administration fiscal result, 2025 | -2.0 % of GDPMEF, Informe de las Finanzas Públicas 2026, as of 2025-12-31 · in force |
| Central Administration fiscal result projected for 2026 | -3.2 % of GDPMEF, Informe de las Finanzas Públicas 2026, Table 18, as of 2026-10-23 · pending |
| Central Administration public debt, end of 2025 | 36.1 % of GDPMEF, Informe de las Finanzas Públicas 2026, section 1.3.5, as of 2025-12-31 · in force |
| Central Administration public debt stock, end of 2025 (89 percent external) | 17931.8 USD millionMEF, Informe de las Finanzas Públicas 2026, section 1.3.5, as of 2025-12-31 · in force |
| Total public sector debt, July 2026 | 34.8 % of GDPMEF Panorama Macroeconómico, July 2026, as of 2026-07-31 · in force |
| BCP net international reserves, July 2026 | 11697.9 USD millionMEF Panorama Macroeconómico, July 2026, as of 2026-07-31 · in force |
| Open unemployment rate, Q2 2026 (5.0 percent a year earlier) | 4.1 %INE, Encuesta Permanente de Hogares Continua, Q2 2026, as of 2026-07-31 · in force |
| Population, Census 2022 final results | 6109903 peopleINE, Censo Nacional de Población y Viviendas 2022, as of 2024-08-21 · in force |
| S&P Global Ratings sovereign rating (outlook stable, last review 17 December 2025) | BBB- ratingMEF Panorama Macroeconómico, July 2026, Table 3, as of 2026-07-31 · in force |
| Moody's sovereign rating (outlook stable, last review 17 July 2026) | Baa3 ratingMEF Panorama Macroeconómico, July 2026, Table 3, as of 2026-07-31 · in force |
| Fitch Ratings sovereign rating (outlook positive, last review 6 October 2025) | BB+ ratingMEF Panorama Macroeconómico, July 2026, Table 3, as of 2026-07-31 · in force |
| BCP reference quotation, US dollar | 5847.9 PYG per USDBanco Central del Paraguay, planilla de cotizaciones, as of 2026-10-27 · in force |
The rule
1. The Constitution establishes a Central Bank of the State (Banca Central del Estado) as a technical body. It has the exclusive power to issue money and, in line with the Government's economic policy objectives, takes part with the other technical bodies of the State in setting monetary, credit and exchange policy, being responsible for carrying it out while preserving monetary stability. The Central Bank may not grant credit, directly or indirectly, to finance public spending outside the budget, except short term advances against the tax revenue budgeted for the year and, in a national emergency, with a reasoned resolution of the Executive and the agreement of the Senate. It may not adopt rules that discriminate between persons or entities doing operations of the same kind, nor deal with persons or entities outside the national or international monetary or financial system. Its organization is set by law, and it reports to the Executive and Congress on the policies it carries out.Constitución Nacional de la República del Paraguay (signed original text, Convención Nacional Constituyente), Art. 285, art. 286 and art. 287, 1992-06-20 official text · verified 2026-10-27
2. The fundamental objectives of the Banco Central del Paraguay (BCP) are to preserve and safeguard the stability of the value of the currency and to promote the efficiency, integrity and stability of the financial system. To that end it takes part in setting monetary, credit and exchange policy and is responsible for carrying it out, setting the targets of those policies with regard to the constitutional objective of monetary stability, the Government's general economic policy guidelines and the year's General Budget; it alone issues legal tender notes and coins, and acts as banker and financial agent of the State. Its credit operations must follow the monetary policy targets and the limits in the Constitution, and all funds of the National Treasury and Central Government entities are deposited at the BCP without remuneration.Ley Nº 489/95 Orgánica del Banco Central del Paraguay, as amended by Ley Nº 6104/2018, Ley 489/95 art. 3, art. 4, art. 57 and art. 74, as worded by Ley 6104 art. 1, 2018-07-03 official text · verified 2026-10-27 · changed: Ley Nº 6104, promulgated on 3 July 2018, rewrote art. 3 (objectives), art. 4 (functions), art. 57 (credit operations), art. 74 (public funds at the BCP) and many other articles of the 1995 charter.
3. The BCP has run an inflation targeting regime officially since 2011. In December 2024 its Board lowered the inflation target, measured by the 12 month change in the Consumer Price Index (IPC), from 4.0 percent to 3.5 percent, for a monetary policy horizon of 18 to 24 months, and kept the tolerance band of 2 percentage points above and below, so the band runs from 1.5 to 5.5 percent. The Monetary Policy Committee (CPM) cut the policy rate (Tasa de Política Monetaria, TPM) by 25 basis points in January and again in February 2026 to 5.50 percent and kept it there at its July 2026 meeting; 12 month inflation was 1.6 percent in July 2026 and inflation expectations for the next 12 months and the policy horizon were 3.5 percent.
Cost to do it: Floor of local guaraní funding: TPM of 5.50 percent a year, before bank spreads.
Example: PYG 1,000,000,000 of working capital priced at the TPM costs PYG 55,000,000 a year before any spread; against 1.6 percent inflation that is a real rate of about 3.8 percent, and about 1.9 percent against the 3.5 percent target. / About US$171,002 of working capital costing about US$9,405 a year at the TPM.BCP Board decision on the inflation target (December 2024); BCP Monetary Policy Committee decisions of 2026, as reported by the MEF Panorama Macroeconómico del Paraguay, July 2026, Inflation target and tolerance band; TPM decisions, 2024-12-19 official text · verified 2026-10-27 · changed: December 2024: target cut from 4.0 to 3.5 percent with the plus or minus 2 point band kept. January and February 2026: TPM cut by 25 basis points each time to 5.50 percent.
Cost to do it: Floor of local guaraní funding: TPM of 5.50 percent a year, before bank spreads.
Example: PYG 1,000,000,000 of working capital priced at the TPM costs PYG 55,000,000 a year before any spread; against 1.6 percent inflation that is a real rate of about 3.8 percent, and about 1.9 percent against the 3.5 percent target. / About US$171,002 of working capital costing about US$9,405 a year at the TPM.BCP Board decision on the inflation target (December 2024); BCP Monetary Policy Committee decisions of 2026, as reported by the MEF Panorama Macroeconómico del Paraguay, July 2026, Inflation target and tolerance band; TPM decisions, 2024-12-19 official text · verified 2026-10-27 · changed: December 2024: target cut from 4.0 to 3.5 percent with the plus or minus 2 point band kept. January and February 2026: TPM cut by 25 basis points each time to 5.50 percent.
4. Annual General Budget laws must keep the Central Administration deficit, including transfers, at no more than 1.5 percent of the GDP estimated for the year; annual growth of public sector primary current spending may not exceed 12 month inflation plus 4 percent; and pay rises may be included only when the minimum wage rises, at most in the same proportion. In general and municipal election years, Central Administration primary current spending from January to July may not exceed 60 percent of the approved budget (the Judiciary excepted). A three year fiscal program goes to Congress with each budget bill, and the Central Administration's medium term result may not exceed an average deficit of 1 percent of GDP. In a national emergency, an international crisis or a fall in domestic activity, Congress may at the Executive's request suspend the deficit and spending rules and the election year rule for the fiscal year, but the deficit may never exceed 3 percent of GDP. Breaches by responsible officials count as poor performance of duty, and the Contraloría General de la República oversees compliance.
Example: The 2026 General Budget, Ley Nº 7609 promulgated on 31 December 2025, was approved with a maximum deficit of 1.5 percent of GDP. The MEF's October 2026 Informe de las Finanzas Públicas now projects a Central Administration deficit of 3.2 percent of GDP for 2026 and 3.9 percent for 2027 (the 2027 budget bill) to clear arrears with medicine suppliers and road contractors, with a return to the 1.5 percent limit from 2028. / On the MEF's July 2026 projection of 2026 nominal GDP of about US$56,456 million, the gap between a 3.2 and a 1.5 percent deficit is about US$960 million.Ley Nº 5098/2013 De Responsabilidad Fiscal, Art. 4, art. 7, art. 9, art. 10, art. 11 and art. 13, 2013-10-29 official text · verified 2026-10-27
Example: The 2026 General Budget, Ley Nº 7609 promulgated on 31 December 2025, was approved with a maximum deficit of 1.5 percent of GDP. The MEF's October 2026 Informe de las Finanzas Públicas now projects a Central Administration deficit of 3.2 percent of GDP for 2026 and 3.9 percent for 2027 (the 2027 budget bill) to clear arrears with medicine suppliers and road contractors, with a return to the 1.5 percent limit from 2028. / On the MEF's July 2026 projection of 2026 nominal GDP of about US$56,456 million, the gap between a 3.2 and a 1.5 percent deficit is about US$960 million.Ley Nº 5098/2013 De Responsabilidad Fiscal, Art. 4, art. 7, art. 9, art. 10, art. 11 and art. 13, 2013-10-29 official text · verified 2026-10-27
| Item | 2026P | 2027P | 2028P | 2029P | 2030P | 2031P |
|---|---|---|---|---|---|---|
| Total revenue | 13.8 | 13.8 | 14.0 | 14.1 | 14.2 | 14.2 |
| Total spending | 15.2 | 16.2 | 14.2 | 14.2 | 14.1 | 13.9 |
| Interest | 1.9 | 2.0 | 1.9 | 1.8 | 1.7 | 1.7 |
| Net lending or borrowing (fiscal result) | -3.2 | -3.9 | -1.5 | -1.5 | -1.5 | -1.5 |
| Primary result | -1.3 | -2.0 | 0.3 | 0.3 | 0.2 | 0.2 |
Central Administration medium term fiscal framework, percent of GDP (MEF, Informe de las Finanzas Públicas 2026, Table 18; P means projection)
| Indicator | Value | Period | Source |
|---|---|---|---|
| Policy rate (TPM) | 5.50% | Since February 2026, held in July 2026 | BCP via MEF Panorama, July 2026 |
| Inflation target | 3.5% (band 1.5% to 5.5%) | Since December 2024 | BCP |
| CPI, 12 months | 1.6% | July 2026 | BCP via MEF Panorama, July 2026 |
| Real GDP growth | 6.6% (2025); 4.5% forecast (2026) | 2025 to 2026 | MEF, IFP 2026 |
| Central Administration deficit | 2.0% (2025); 3.2% projected (2026) | 2025 to 2026 | MEF, IFP 2026 |
| Central Administration debt | 36.1% of GDP, US$17,931.8 million | End of 2025 | MEF, IFP 2026 |
| Net international reserves | US$11,697.9 million | July 2026 | MEF Panorama, July 2026 |
| Unemployment | 4.1% | Q2 2026 | INE, EPHC |
| Population | 6,109,903 | Census 2022 | INE |
Key figures and their official sources (verified 27 October 2026)
| Agency | Rating | Outlook | Last review |
|---|---|---|---|
| S&P Global Ratings | BBB- | Stable | 17 December 2025 |
| Moody's | Baa3 | Stable | 17 July 2026 |
| Fitch Ratings | BB+ | Positive | 6 October 2025 |
Sovereign credit ratings (MEF Panorama Macroeconómico, July 2026, Table 3)
Worked example
- Cost of local money. A subsidiary that funds PYG 1,000,000,000 (about US$171,002) of working capital in guaraníes faces the 5.50 percent TPM as the floor of local rates: PYG 55,000,000 (about US$9,405) a year before any bank spread. Against 12 month inflation of 1.6 percent in July 2026 that floor is a real rate of about 3.8 percent (1.055 divided by 1.016, minus 1).
- Strong guaraní. A local cost base of PYG 1,000,000,000 was about US$128,037 at the end of 2024 rate of PYG 7,810.24 per US dollar and is about US$171,002 at PYG 5,847.90 on 27 October 2026, about 33.6 percent more in dollars. The MEF's average rate assumption for 2026 fell from PYG 7,881 in the 2026 budget to PYG 6,217; budget local costs in dollars on current rates, not on the budget assumption.
- Fiscal headroom. Central Administration debt was 36.1 percent of GDP (US$17,931.8 million) at the end of 2025, and the MEF projects 31.0 percent for 2026 because of the stronger guaraní, 33.1 percent for 2027 and 32.0 percent by 2031. The 2026 and 2027 deficits of 3.2 and 3.9 percent of GDP are above the 1.5 percent cap of Ley Nº 5098 art. 7 and the 3 percent ceiling of art. 11, which is why the 2028 return to 1.5 percent is the key fiscal signal to watch.
Step by step
- 1. Price your Paraguay business case on the BCP's TPM and the latest 12 month CPI on the day you price, and treat the 3.5 percent target as the medium term anchor (Ley Nº 489/95 art. 3 and art. 4 as amended by Ley Nº 6104/2018).
- 2. Put the BCP Monetary Policy Committee meeting dates, the monthly CPI release and the INE quarterly labor survey in your planning calendar; see /calendar/.
- 3. Read the BCP's Informe de Política Monetaria and the MEF's annual Informe de las Finanzas Públicas, published in October with the next year's budget bill, for growth, inflation, deficit and debt projections.
- 4. Follow the General Budget law each December and the MEF's monthly SITUFIN fiscal report. A budget or law that departs from the 1.5 percent cap, or a request to Congress under Ley Nº 5098 art. 11, is the main fiscal signal.
- 5. If you supply the State, check the MEF's arrears clearance schedule before you bid; the 2026 and 2027 deficit path exists to pay overdue obligations with medicine suppliers and road contractors.
- 6. Set your currency policy before the first wire: decide what stays in guaraníes and what in US dollars, and hedge dividends, intercompany loans and imported inputs. For the free exchange guarantee and headline taxes see start/paraguay-vs-argentina-ease-of-doing-business; track data at /dashboard/ and the country page at /country/paraguay/.
- 7. If your structure involves Argentina (trade through the Paraná river, energy from the binational Yacyretá dam, FX or tax), check the Argentine side separately in the Argentine guide; this page covers only Paraguay.
Common traps
- Reading the 1.5 percent deficit cap as binding in every year. Ley Nº 5098 is an ordinary law; the MEF's own projections put the Central Administration deficit at 3.2 percent of GDP in 2026 and 3.9 percent in 2027, above both the art. 7 cap and the 3 percent ceiling in art. 11.
- Reading the 3.5 percent target as a forecast. The target has a 2 point band either side and an 18 to 24 month horizon; inflation was 1.6 percent in July 2026, below the target but inside the band.
- Using stale exchange rate assumptions. The 2026 budget assumed an average of PYG 7,881 per US dollar, the MEF now assumes PYG 6,217, and the BCP reference rate was PYG 5,847.90 on 27 October 2026. Dollar costs of a guaraní payroll have risen sharply.
- Mixing debt measures. Central Administration debt (36.1 percent of GDP at the end of 2025) and total public sector debt (34.8 percent in July 2026) use different coverage and should not be compared directly; most debt is in US dollars (69.8 percent of public sector debt in July 2026).
- Mixing population figures. The Census 2022 count is 6,109,903; INE projections used by the MEF for 2026 are higher (6,460 thousand). Use the census for market sizing at a fixed date and projections for forward plans.
- Expecting central bank financing of the State. Constitution art. 286 bars BCP credit to finance spending outside the budget except short term advances against budgeted taxes or a national emergency with Senate agreement.
Sources
- Constitución Nacional de la República del Paraguay, signed original text (BACN)
- Ley Nº 6104/2018, amending Ley Nº 489/95 Orgánica del Banco Central del Paraguay (BACN)
- Ley Nº 5098/2013 De Responsabilidad Fiscal (BACN)
- MEF, Informe de las Finanzas Públicas 2026 (October 2026)
- MEF, Panorama Macroeconómico del Paraguay, July 2026
- MEF, promulgation of the 2026 General Budget, Ley Nº 7609
- Banco Central del Paraguay, reference exchange rates
- INE, final results of the 2022 Census
- Agencia de Información Paraguaya, INE labor survey Q2 2026
Related pages
- start/paraguay-vs-argentina-ease-of-doing-business
- /country/paraguay/
- /calendar/
- Live dashboard
- https://theargentinethread.com/guide/
Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X