Paraguay has entered a new economic phase. After years of sound macroeconomic management and strong agricultural exports, the country now has the opportunity to move from stability to transformation.

The renewed international debate over the Panama Canal has brought to light something deeper than a mere dispute over sovereignty. It has shown just how much Panama’s prosperity depends on institutional credibility and how urgent it is for the country to strengthen the foundations of its free-enterprise model before external pressures put it to an even greater test.

When Yamandú Orsi took office in March 2025, returning the Frente Amplio to power after five years in the opposition, Latin American investors were watching closely. Uruguay’s sovereign debt spreads remained stable. The investment-grade ratings assigned by the major agencies remained unchanged. By regional standards, the transition was uneventful. And that is precisely the point.

In previous columns, I have argued that the high cost of capital in Latin America is primarily due to political risk and weak institutions. Brazil, the region’s largest economy, is one of the clearest examples.

After analyzing the cost of capital across Latin America throughout this series, one conclusion stands out: the region’s high financing costs are not a fixed condition. They stem from policy decisions and persistent structural weaknesses—factors that can be improved over time.