Paraguay: Fifth Review Under the Policy Coordination Instrument, Request for Modification of a Quantitative Target and Resetting of Reform Targets, Third Review Under the Arrangement Under the Resilience and Sustainability Facility, Rephasing of Reform Measures, and Requests for Extension of the Policy Coordination Instrument and the Resilience and Sustainability Facility Arrangement-Press Release; and Staff Report

This paper presents Paraguay’s Fifth Review under the Policy Coordination Instrument (PCI), Request for Modification of a Quantitative Target and Resetting of Reform Targets, Third Review under the Arrangement under the Resilience and Sustainability Facility (RSF), Rephasing of Reform Measures, and Requests for Extension of the Policy Coordination Instrument and the Resilience and Sustainability Facility Arrangement. The Paraguayan economy remains robust underpinned by buoyant domestic demand. Economic activity continued its strong momentum in early 2025 with real gross domestic product expected to expand 3.8 percent this year. Headline inflation remains contained within the central bank’s tolerance range. Staying the course with the fiscal consolidation plan and structural reforms will be critical to preserve macroeconomic stability. Program performance under the PCI and RSF remains satisfactory, underpinned by a strong commitment to pursue prudent macroeconomic policies and structural reforms to enhance the country’s prospects for long-term sustainable and inclusive growth.