Countries › Paraguay › Guide › 2. Macro and country context › Paraguay public finances: the budget cycle, the fiscal rule, debt structure and the 2027 budget bill
Paraguay public finances: the budget cycle, the fiscal rule, debt structure and the 2027 budget bill
Last verified: 2026-10-28 · Status: Changing
The Executive must send the General Budget bill to Congress by 1 September; if Congress does not act within its fixed deadlines the bill is deemed approved, and if no new budget is passed the current one stays in force. The fiscal responsibility law caps the Central Administration deficit at 1.5 percent of GDP, but the 2027 budget bill plans 3.9 percent to clear arrears, with a return to 1.5 percent from 2028. Tax revenue is only 11.2 percent of GDP, VAT is the largest tax, Central Administration debt was 36.1 percent of GDP at the end of 2025 and 89 percent of it is external.
USD figures use PYG 5,868.31 per US dollar, the Banco Central del Paraguay reference quotation for 28 October 2026, retrieved on the verification date, unless another rate is named (the MEF budget assumptions of PYG 7,545 average for 2025 and PYG 6,458 for 2027 are labeled where used). Conversions are for orientation only.
Key facts
| Deadline for the Executive to send the budget bill to Congress | 1 September dateConstitución art. 216, as of 1992-06-20 · in force |
|---|---|
| Majority Congress needs to reject the whole budget bill | Two thirds in each chamber ruleConstitución art. 216, as of 1992-06-20 · in force |
| Cap on annual growth of public sector primary current spending | Inflation plus 4 %Ley Nº 5098 art. 7 numeral 2, as of 2013-10-31 · in force |
| Central Administration primary current spending January to July in election years, maximum share of the budget | 60 %Ley Nº 5098 art. 9, as of 2013-10-31 · in force |
| Medium term average Central Administration deficit in the three year program | 1 % of GDPLey Nº 5098 art. 10 c), as of 2013-10-31 · in force |
| Central Administration revenue, 2025 | 14.3 % of GDPMEF IFP 2026, Table 1, as of 2025-12-31 · in force |
| Central Administration tax revenue (tax burden), 2025 | 11.2 % of GDPMEF IFP 2026, Table 2, as of 2025-12-31 · in force |
| VAT revenue, 2025 | 5.8 % of GDPMEF IFP 2026, Table 2, as of 2025-12-31 · in force |
| Itaipú and Yacyretá royalties and compensation, 2025 | 3451.7 PYG billionMEF IFP 2026, Table 2, as of 2025-12-31 · in force |
| Central Administration interest, 2025 | 1.9 % of GDPMEF IFP 2026, Table 1, as of 2025-12-31 · in force |
| Central Administration deficit in the 2027 budget bill | 3.9 % of GDPMEF IFP 2026, Table 24, as of 2026-10-23 · pending |
| Central Administration revenue in the 2027 budget bill | 70091 PYG billionMEF IFP 2026, Table 22, as of 2026-10-23 · pending |
| Central Administration spending in the 2027 budget bill | 76530 PYG billionMEF IFP 2026, Table 23, as of 2026-10-23 · pending |
| External share of Central Administration debt, end of 2025 | 89.0 %MEF IFP 2026, section 1.3.5, as of 2025-12-31 · in force |
| Long term share of public debt, end of 2025 | 91.9 %MEF IFP 2026, section 1.3.5, as of 2025-12-31 · in force |
| General Government net debt, end of 2025 | 30.0 % of GDPMEF IFP 2026, Table 16, as of 2025-12-31 · in force |
| Public debt service, 2025 | 1762.8 USD millionMEF IFP 2026, section 1.3.5, as of 2025-12-31 · in force |
| Central Administration debt projected for 2031 (base scenario) | 32.0 % of GDPMEF IFP 2026, section 2.2.5, as of 2026-10-23 · pending |
The rule
1. The Executive presents the General Budget bill (Presupuesto General de la Nación, PGN) each year no later than 1 September, and Congress must give it absolute priority. A bicameral committee reports within 60 calendar days; the Chamber of Deputies then has 15 calendar days and the Senate 15 calendar days, with 10 calendar days for each round on points of disagreement. All deadlines are peremptory and failure to act counts as approval. Congress can reject the whole bill only by two thirds in each chamber.
Example: Counting the maximum periods from 1 September (60 plus 15 plus 15 plus 10 plus 10 calendar days), the budget is sanctioned by about the second week of December at the latest, before the 21 December recess.Constitución Nacional de la República del Paraguay (1992, with the 2011 amendment to art. 120), Art. 216 and art. 202 numeral 5, 1992-06-20 official text · verified 2026-10-28
Example: Counting the maximum periods from 1 September (60 plus 15 plus 15 plus 10 plus 10 calendar days), the budget is sanctioned by about the second week of December at the latest, before the 21 December recess.Constitución Nacional de la República del Paraguay (1992, with the 2011 amendment to art. 120), Art. 216 and art. 202 numeral 5, 1992-06-20 official text · verified 2026-10-28
2. If the Executive does not submit the budget bill on time, or Congress rejects it by two thirds, the budget of the current fiscal year stays in force for the next year. Congress approves or rejects public loans and, after a report of the Comptroller General (Contraloría General de la República), the detail of revenue and spending in the budget execution.Constitución Nacional de la República del Paraguay (1992, with the 2011 amendment to art. 120), Art. 217 and art. 202 numerals 10 and 20, 1992-06-20 official text · verified 2026-10-28
3. Annual budget laws must keep the Central Administration deficit, including transfers, at no more than 1.5 percent of estimated GDP; growth of public sector primary current spending may not exceed 12 month inflation plus 4 percent; and pay rises are allowed only when the minimum wage rises and at most in the same proportion. Revenue estimates are set by the Executive through the finance ministry. In general and municipal election years, Central Administration primary current spending from January to July is capped at 60 percent of the approved budget (the Judiciary excepted).Ley Nº 5098/2013 De Responsabilidad Fiscal, Art. 7, art. 8 and art. 9, 2013-10-29 official text · verified 2026-10-28
4. Each budget bill must come with a three year consolidated fiscal program, separating Central and decentralized Administration, with GDP, inflation, growth, exchange rate and import assumptions, spending by funding source, a debt sustainability analysis and a medium term Central Administration result of no more than an average 1 percent of GDP deficit. In a national emergency, an international crisis or a fall in domestic activity, Congress may, at the Executive's request, suspend the deficit, spending growth and election year rules for that fiscal year, but the deficit may never exceed 3 percent of GDP.Ley Nº 5098/2013 De Responsabilidad Fiscal, Art. 10 and art. 11, 2013-10-29 official text · verified 2026-10-28
5. The 2027 budget bill (Proyecto de PGN 2027) programs total resources of PYG 166.3 trillion for all public entities (38.4 percent of 2027 GDP). For the Central Administration it plans revenue of PYG 70,091 billion (16.2 percent of GDP, of which tax revenue PYG 48,676 billion or 11.2 percent), spending of PYG 76,530 billion (17.7 percent of GDP, up 17.2 percent on the approved 2026 budget) and net borrowing of PYG 16,864 billion, a deficit of 3.9 percent of GDP. The increase pays overdue obligations with medicine suppliers and road contractors, pensions and social programs; the MEF projects a return to the 1.5 percent cap from 2028.
Example: Central Administration net borrowing of PYG 16,864 billion in the 2027 bill; interest of PYG 8,496 billion (2.0 percent of GDP). / About US$2,874 million of net borrowing at PYG 5,868.31, or about US$2,611 million at the MEF's 2027 average assumption of PYG 6,458; interest about US$1,448 million at PYG 5,868.31.Ministerio de Economía y Finanzas, Informe de las Finanzas Públicas 2026, chapter 3 (Proyecto de PGN 2027), Tables 22, 23 and 24; executive summary, 2026-10-23 official text · verified 2026-10-28 · changed: October 2026: the MEF's updated fiscal path moved the 2026 Central Administration deficit to 3.2 percent and set 3.9 percent for 2027 in the budget bill, above the 1.5 percent cap of Ley Nº 5098 art. 7, with convergence to 1.5 percent in 2028.
Example: Central Administration net borrowing of PYG 16,864 billion in the 2027 bill; interest of PYG 8,496 billion (2.0 percent of GDP). / About US$2,874 million of net borrowing at PYG 5,868.31, or about US$2,611 million at the MEF's 2027 average assumption of PYG 6,458; interest about US$1,448 million at PYG 5,868.31.Ministerio de Economía y Finanzas, Informe de las Finanzas Públicas 2026, chapter 3 (Proyecto de PGN 2027), Tables 22, 23 and 24; executive summary, 2026-10-23 official text · verified 2026-10-28 · changed: October 2026: the MEF's updated fiscal path moved the 2026 Central Administration deficit to 3.2 percent and set 3.9 percent for 2027 in the budget bill, above the 1.5 percent cap of Ley Nº 5098 art. 7, with convergence to 1.5 percent in 2028.
6. In 2025 Central Administration revenue was PYG 53,220.0 billion (14.3 percent of GDP) and tax revenue PYG 41,501.3 billion (11.2 percent of GDP), led by taxes on goods and services of PYG 25,078.1 billion, of which VAT PYG 21,417.6 billion (5.8 percent of GDP). Royalties and compensation from the binational dams Itaipú and Yacyretá fell 25.8 percent to PYG 3,451.7 billion (0.9 percent of GDP), because the payments are in US dollars and fall in guaraníes when the currency strengthens. Spending was PYG 54,890.2 billion and the deficit 2.0 percent of GDP.
Example: At the 2025 average rate of PYG 7,545 per US dollar, tax revenue was about US$5,500 million and binational dam revenue about US$457 million.Ministerio de Economía y Finanzas, Informe de las Finanzas Públicas 2026, section 1.3.1, Tables 1 and 2, 2026-10-23 official text · verified 2026-10-28
Example: At the 2025 average rate of PYG 7,545 per US dollar, tax revenue was about US$5,500 million and binational dam revenue about US$457 million.Ministerio de Economía y Finanzas, Informe de las Finanzas Públicas 2026, section 1.3.1, Tables 1 and 2, 2026-10-23 official text · verified 2026-10-28
7. Central Administration debt was 36.1 percent of GDP (US$17,931.8 million) at the end of 2025: 89.0 percent external and 11.0 percent domestic, with 91.9 percent long term. The local currency share rose 5.5 points in 2025 through guaraní bond issues at home and abroad. Debt service in 2025 was US$1,762.8 million, 52.0 percent on bonds and 42.4 percent to multilateral and bilateral lenders. General Government net debt (gross debt less liquid financial assets) was 30.0 percent of GDP. The MEF projects debt at 31.0 percent of GDP in 2026 (mainly a currency valuation effect), 33.1 percent in 2027 and 32.0 percent in 2031.Ministerio de Economía y Finanzas, Informe de las Finanzas Públicas 2026, sections 1.3.5 and 2.2.5, Table 16 and Table 21, 2026-10-23 official text · verified 2026-10-28
| Item | 2024 PYG bn | 2025 PYG bn | 2024 % GDP | 2025 % GDP |
|---|---|---|---|---|
| Total revenue | 50,882.4 | 53,220.0 | 15.0 | 14.3 |
| Tax revenue | 38,210.0 | 41,501.3 | 11.3 | 11.2 |
| Binational dams (in other revenue) | 4,649.1 | 3,451.7 | 1.4 | 0.9 |
| Total spending | 53,104.3 | 54,890.2 | 15.7 | 14.8 |
| Of which pay of employees | 21,993.4 | 23,899.2 | 6.5 | 6.4 |
| Of which interest | 6,633.3 | 6,968.4 | 2.0 | 1.9 |
| Net acquisition of non financial assets (investment) | 6,358.5 | 5,763.5 | 1.9 | 1.6 |
| Net lending or borrowing (fiscal result) | -8,580.4 | -7,433.7 | -2.5 | -2.0 |
| Primary result | -1,947.1 | -465.3 | -0.6 | -0.1 |
Central Administration operations, 2024 and 2025 (MEF, IFP 2026, Table 1; PYG billion and percent of GDP)
| Tax | PYG billion | % of GDP | Change on 2024 |
|---|---|---|---|
| Taxes on income, profits and capital gains | 11,318.8 | 3.0 | 6.5% |
| VAT | 21,417.6 | 5.8 | 10.5% |
| Excise (selectivos) | 3,660.6 | 1.0 | -1.6% |
| Taxes on foreign trade | 4,200.3 | 1.1 | 14.2% |
| Other taxes | 904.0 | 0.2 | 13.9% |
Tax revenue by type, 2025 (MEF, IFP 2026, Table 2)
| Item | PGN 2026 | Bill 2027 | 2027 % GDP |
|---|---|---|---|
| Total revenue | 67,042 | 70,091 | 16.2 |
| Tax revenue | 45,328 | 48,676 | 11.2 |
| Total spending | 65,289 | 76,530 | 17.7 |
| Use of goods and services | 7,820 | 14,294 | 3.3 |
| Interest | 8,641 | 8,496 | 2.0 |
| Net lending or borrowing | -6,055 | -16,864 | -3.9 |
Approved 2026 budget and 2027 budget bill, Central Administration (MEF, IFP 2026, Tables 22 to 24; PYG billion)
| Item | 2026P | 2027P | 2028P | 2029P | 2030P | 2031P |
|---|---|---|---|---|---|---|
| Amortization | 616.7 | 664.0 | 918.0 | 813.6 | 1,291.0 | 1,992.8 |
| Interest and fees | 1,060.3 | 1,090.4 | 1,049.0 | 992.3 | 929.6 | 831.9 |
| Total | 1,677.0 | 1,754.4 | 1,967.0 | 1,805.9 | 2,220.6 | 2,824.7 |
Projected Central Administration debt service, US$ million (MEF, IFP 2026, Table 21; SIGADE June 2026 cut, excludes new borrowing)
Worked example
- Supplying the State. The 2027 bill raises spending on goods and services by 82.8 percent to PYG 14,294 billion (about US$2,436 million at PYG 5,868.31), mainly to pay overdue bills with pharmaceutical suppliers. A supplier with receivables from the State should check whether its invoices are in the arrears program before pricing new tenders.
- Currency effect on State revenue. Binational dam payments are set in US dollars. US$457 million converted at the 2025 average of PYG 7,545 is about PYG 3,448 billion; the same dollars at PYG 5,868.31 would be about PYG 2,682 billion, a fall of more than 22 percent in guaraníes with no change in dollars.
- Debt wall. Projected amortization rises from US$616.7 million in 2026 to US$1,992.8 million in 2031 before any new borrowing, which is why the return to the 1.5 percent deficit from 2028 matters for refinancing costs and the sovereign ratings shown on macro/economy-at-a-glance.
Step by step
- 1. Each September read the budget bill and the MEF's Informe de las Finanzas Públicas (published in October) for the fiscal path, tax revenue estimates and the three year program required by Ley Nº 5098 art. 10.
- 2. Follow the bill through the bicameral committee (60 days), Deputies (15 days) and Senate (15 days) under Constitution art. 216; under the maximum periods the budget is sanctioned before the 21 December recess.
- 3. If you sell to the State, check budget allocations for your contracting entity and the arrears clearance program before you bid.
- 4. In general and municipal election years (the next general election is in 2028), expect the 60 percent January to July cap on primary current spending under Ley Nº 5098 art. 9 to slow payments and new programs in the first half.
- 5. Read sovereign debt news against the MEF's debt service table: refinancing needs rise sharply from 2030.
- 6. For FX on public payments and the guaraní's effect on dollar costs, see fx/fx-market-and-exchange-rate; for taxes see taxes/tax-system-overview.
Common traps
- Treating the 1.5 percent cap as binding every year. The 2026 path (3.2 percent) and the 2027 bill (3.9 percent) are above both the 1.5 percent cap and the 3 percent ceiling of Ley Nº 5098 art. 11; the rule is an ordinary law that later laws can depart from.
- Reading the 2026 fall in debt to GDP as repayment. The MEF says the drop from 36.1 to 31.0 percent of GDP is mainly the valuation effect of a stronger guaraní on dollar debt, not a smaller stock.
- Mixing coverages. Central Administration, General Government and total public sector figures differ; the 2027 deficit is 3.9 percent for the Central Administration, 3.8 percent for General Government and 4.2 percent for the public sector.
- Assuming a late budget means a shutdown. Under art. 217 the current budget simply stays in force.
- Ignoring the low tax take. Tax revenue of about 11 percent of GDP leaves little fiscal room, and the MEF's report has a section on options to strengthen tax revenue, so watch for tax measures as well as spending restraint during the return to the 1.5 percent cap.
Sources
- MEF, Informe de las Finanzas Públicas 2026 (October 2026)
- Constitución Nacional, Chamber of Deputies edition (2024 PDF)
- Ley Nº 5098/2013 De Responsabilidad Fiscal (BACN)
- MEF, Panorama Macroeconómico del Paraguay, July 2026
- Banco Central del Paraguay, reference exchange rates
Related pages
- macro/economy-at-a-glance
- macro/political-system-and-lawmaking
- macro/external-sector-trade-fdi-and-reserves
- start/reform-tracker
- taxes/tax-system-overview
- taxes/iva-value-added-tax
- fx/fx-market-and-exchange-rate
- finance/capital-markets-banking-and-credit
- disputes/claims-against-the-state
- /country/paraguay/
- /calendar/
- Live dashboard
Related: Paraguay country profile · live dashboard · central bank and release calendar · our posts on X
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