Paraguay needs to invest US$15.18 billion between 2025 and 2030 to close infrastructure gaps in key sectors, according to a new report from the Inter-American Development Bank (IDB). The study, titled “Investment needs up to 2030 to progress towards the fulfillment of the Sustainable Development Goals,” outlines the necessary funding for transport, water and sanitation, electricity, and telecommunications.
The analysis highlights that these resources are essential for the expansion, maintenance, and replacement of existing structures. According to the IDB, such investments will allow the nation to “advance towards the goals of access and quality of services considered.”
Important to note is that Paraguay could receive several billions in project financing from the IDB in a major investment push and, earlier, received a US$19 million IDB loan to boost the country’s foreign investment and trade efficiency.
Breakdown of required investment
The IDB report specifies that the transport sector requires the largest share of the investment, amounting to US$6.17 billion. This is followed by water and sanitation, which needs US$4.19 billion. The electricity sector requires US$2.45 billion, while telecommunications infrastructure needs are estimated at US$2.36 billion.
Together, the transport and water and sanitation sectors account for approximately 68% of the total required funding. Within the transport category, road infrastructure is the most significant component, demanding US$5.3 billion of the total allocated for the sector.
“Improving connectivity and productivity”
The report underscores that Paraguay continues to have “significant investment needs in economic infrastructure.” This, according to the report, is “particularly evident in the water sector”, where the coverage of safely managed services was last recorded at 64.4%, indicating “a considerable gap in service quality and accessibility for a large portion of the population”.
These investments are framed within the broader objective of meeting the Sustainable Development Goals (SDGs), a set of global targets, according to the IDB “aimed at achieving peace and prosperity for people and the planet”. The funding is intended to “directly improve public services” and, consequently, “the quality of life for citizens”.
Projections for “a gradual recovery”
The IDB study also notes that the Paraguay’s updated fiscal trajectory forecasts a gradual recovery in public investment. It projects that the net acquisition of non-financial assets will increase from 1.6% of GDP in 2025 to 1.8% in 2026.
Furthermore, the bank maintains that “sustained increases in infrastructure investment can stimulate economic activity and foster growth in the medium term”. National and regional estimates cited in the report place the necessary annual investment in infrastructure at between 4.6% and 6% of GDP.
The challenge of financing
The report concludes by emphasising the scale of the financial task ahead. Reaching the necessary investment levels presents “challenges in financing and resource allocation.”
To meet these demands, the IDB suggests that it will be necessary to “prioritise projects, improve the efficiency of public investment, and resort to complementary financing mechanisms.” This points towards a strategy that combines public funds with private sector involvement and other innovative financial solutions to bridge the US$15.18 billion gap.
