In this sixth installment of a 12-part series titled “The Origins of Fiscal Imbalance in Paraguay: a technical and comparative perspective,” I explore in depth the fiscal deficit in our country. We will discuss the burden of fixed expenditures, focusing on current spending, which consumed 54.1% of tax revenue in 2025—it was like a chain binding the country. Public sector salaries, medications, and social programs such as Tekoporã dominated the budget, leaving little room for investment.

In September 2025, Argentina faces a severe economic crisis under the administration of Javier Milei, marked by a devaluation of the peso, negative foreign exchange reserves, persistent inflation, and pressure in the financial markets. In this context, the United States, through the Department of the Treasury, led by Secretary Scott Bessent, announced its commitment to offer Argentina “all stabilization options.”

Our beautiful homeland, this land of mighty rivers and idyllic fields, has undergone a fiscal U-turn in 2024 that deserves to be dissected with a scalpel, so we can understand its implications and avoid falling into blind celebration. The numbers speak for themselves: tax revenues grew by 9.3% in the first quarter, driven by a stronger VAT and an income tax fueled by the agro-export sector.

Paraguay generates more than 99% of its electricity from hydroelectric sources. Itaipú, Yacyretá, and Acaray form an energy mix that is the envy of many due to its clean energy and low cost. But this strength also represents a vulnerability: the country’s dependence on the Paraná River and lack of diversification expose it to climate-related risks, while the distribution network is not keeping pace with demand.

Public debt reached USD 18.33 billion (40.7% of GDP, which stands at USD 45 billion), of which USD 12.47 billion is external debt (27.7% of GDP). A pension fund system would help mobilize domestic savings and reduce reliance on international loans. Paraguay’s formal workforce totals 1.18 million workers, with an average monthly wage of USD 413. If each worker contributed 10% (USD 41.3), this would generate USD 584.9 million per year.