Paraguay's COVID-19 response may lose initial lustre
Wednesday, May 20, 2020
Subject
The impact of COVID-19.
Significance
In response to the COVID-19 outbreak, the government has ditched the Fiscal Responsibility Law (LRF), in force since 2015, at the same time launching a 1-billion-dollar bond issue in order to cover a surging fiscal deficit. Paraguay has won plaudits for its timely response to the global spread of the pandemic with the introduction of a strict quarantine.
Impacts
- Fiscal limits may continue to be breached as elections draw nearer.
- Business pressures will continue to tilt the balance towards increased borrowing rather than increased taxes.
- The government could lose the momentum gained from its COVID-19 response if related corruption allegations mount.
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