The Finance Minister of Paraguay, Benigno López, today defended the strength of his country's economy in the face of the volatility of Brazil and Argentina, which he considered to be an issue "that has not yet been resolved".
"Paraguay is no stranger to what is happening in the region and in the world, there is a global slowdown that is explained by various factors that affect us, and especially the Argentine and Brazilian issues, which are not resolved," he said. López in an interview with Efe at the headquarters of the World Bank, in Washington.
The minister made the remarks after the International Monetary Fund (IMF) published on Tuesday the report "World Economic Outlook", which set its forecasts for growth of gross domestic product (GDP) of Paraguay at 3.5%, 7 tenths less than in the October 2018 document.
"The reading of the IMF is correct and realistic. (…) It is a complicated neighborhood of ours, but this has always been the case and, despite these forecasts, Paraguay will continue to grow and at important levels within the region," he said. López.
The finance minister argued that the current contraction in Argentina, which the IMF expects to be 1.2% this year, will affect "fundamentally" the Paraguayan commercial sector and businesses on the border between the two countries.
"Its policies have resulted in a significant devaluation of the Argentine currency which, unlike the Paraguayan currency, which remains with a certain strength, generates a price difference due to exchange rate issues," he explained.
However, Lopez predicted that the situation "will go tempering in time" and said that the situation will be corrected "at the end of the first half of this year".
During his participation in the joint spring meeting of the IMF and the World Bank (WB), Lopez will offer a talk on human capital with the WB executive director, Kristalina Georgieva, and the New Zealand Minister of Finance, Grant Robertson, among others.
He will also meet with the recently elected new president of the WB, David Malpass, who arrived at the multilateral institution after the resignation of his predecessor, Jim Yong Kim, earlier this year.
Lopez said that the success of the Paraguayan economy in recent years with respect to other countries in the region is explained thanks to a "responsible" treasury when it comes to spending and designing efficient public policies.
"The Paraguayan Central Bank has maintained its independence and stability and has been able to timely intervene in monetary policy without altering market conditions, establishing inflation targets," he added.
This strategy has led, according to Lopez, that Paraguay "create conditions for the private sector to continue growing".
On the fiscal reform that the Government of Mario Abdo Martinez will present to the Paraguayan Congress in May, López insisted that it is an "important" moment to protect public policies in the long term.
"We have not been sufficiently successful in social policies, we continue to be a very unequal country, with an unfair tax base, since it is not fair," he acknowledged.
Lopez said that the tax reform "will not get the charm that Paraguay has with low taxes and costs, and competitive", but will correct "some anomalies" so that "those who earn more, pay more."
The IMF predicted today that Latin America's economy will grow 1.4% in 2019 and 2.4% in 2020, a reduction of six and one tenth of the figures estimated in January, due to the worsening of the forecasts of Mexico and Brazil and the deepening of the Venezuelan crisis.
Alex Segura Lozano