Government and institution measures in response to COVID-19.

Government and institution measures in response to COVID-19.

Return to homepage  |  Last updated: 28 October, 2020

General Information

On October 15, Paraguay opened three border posts with Brazil, for circulation of cars only, at limited timetables, and a week later the airports of Asunción and Ciudad del Este officially reopened, with a limited number of flights. Physical-presence school classes will remain suspended until end-2020.

Economic stimulus measures

(e.g. loans, moratorium on debt repayments…)

  • On March 23rd, 2020, the government submitted to congress a package of emergency spending measures of around $945 million (2.5 percent of GDP).
  • The package includes additional health-related spending of $500 million, $400 million measures to support the vulnerable population, and $45 million emergence funding for small enterprises.
  • The government has asked Congress to authorize additional borrowing of up to U.S. $1.6 billion (4 percent of GDP) from IFIs and through bond issuances.
  • In addition, a National Emergency Special Credit Facility (FCE) was created to channel up to $760 million in liquidity support to SMEs. The government has also allowed banks to automatically refinance loans to private sector companies that are in repayment difficulties, and postponed collection of taxes and user fees for 2 months.
  • The Development Finance Agency (AFD) has started programs to help refinance home loans for a period of 60 months, and to help SMEs finance working capital needs. A US$ 500 million MSME Guarantee Fund has been set up to support credit creation in the SME sector.
  • Since early March, the central bank has lowered the policy rate by 275 basis points, to 1.25 percent.
  • The interest rate for the central bank’s overnight liquidity facility window has also been reduced, by 200 basis points, from 4.5 percent to 2.5 percent.
  • The Central Bank has also reduced the minimum reserve requirements on domestic and foreign currency deposits, freeing up $959 million in the process for banks to make new loans.
  • The central bank is continuing with its policy of letting the exchange rate absorb shocks, and have its value determined by market forces. FX interventions are only carried out to prevent disorderly market conditions. On April 21, the IMF Executive Board approved an emergency financing loan under the RFI in the amount of about $274 million.

Other measures and sources

Main sources of information