Paraguay’s credit rating has been raised to investment-grade, marking a momentous milestone for one of the fastest-growing economies in Latin America.
The rating was raised from Baa3 to Ba1, putting Paraguay on the first rung of investment-grade and on a par with high-achieving developing economies such as India and Panama.
“The upgrade of Paraguay’s rating reflects a combination of factors, including robust and sustained economic growth and our expectations that the economy has become more resilient to shocks,” Moody’s said in a statement.
“The stable outlook reflects our expectations that economic growth will remain robust, supported by public and private investment in key infrastructure projects,” it added.
The President of the Republic, Santiago Peña, was delighted with the news. “This achievement is the result of decades of effort and dedication to transform our economy and strengthen our institutions,” he said, in a statement from Paris where he attended the Opening Ceremony of the Olympic Games, in support of the 28 Paraguayan nationals who qualified for the competitions across seven different sports.
Peña, himself an economics graduate and formerly Paraguays Finance Minister from 2013 to 2018, explained that Moody’s recognition not only reduces the country’s risk and improves its financing conditions but also sends a clear message to the world that Paraguay is a reliable and attractive place to invest.
“This achievement will boost the creation of quality jobs, investment in infrastructure, and the diversification of our economy,” he affirmed.
He added that obtaining the investment grade is a crucial step for Paraguay’s sustainable development, consolidating its economy on the international stage and opening new opportunities for all sectors.
Paraguay’s economy grew by 4.7% in 2023 and the Central Bank (BCP) projects an expansion of 3.8% for this year, given good performances in the agricultural sector.
In December 2023, Moody’s graded Paraguay as “Ba1 positive” while Fitch Ratings said it deserved a “BB+ stable.” The upward trend lifted off in February, when Standard & Poor’s raised the South American country from “BB” to “BB+ with a stable outlook,” one notch below investment grade.
Credit rating agencies gauge the risk of bankruptcy or insolvency in countries to help investors make informed decisions. “Investment-grade” encompasses a series of grades, with AAA representing the lowest risk. When these ratings are lowered, investors demand higher returns for assuming greater risks.
Chile tops the list of Latin American countries with an A2 grade, while Argentina is on the other end of the table with a CCC.
“This is a triumph for all Paraguayans. Let’s continue working together for a more prosperous and equitable Paraguay,” the President said in a video posted on social media.
Peña also highlighted that achieving this investment grade is the result of deep institutional reforms undertaken since the early 2000s.
In this regard, he recalled that Paraguay began a process of profound reforms and building institutional pillars since 2002, focusing on achieving macroeconomic stability and strengthening its financial system.
In this context, he highlighted that significant fiscal reforms were implemented between 2013 and 2018, promoting transparency and modernising public finances.
He mentioned that the Fiscal Responsibility Law demonstrated economic maturity. At the same time, the investment laws through public-private partnerships and turnkey financing expanded the country’s capacity for public infrastructure investment.
Regarding the current period, he mentioned strengthening existing institutions and creating new ones, such as the Pension Superintendence, the National Directorate of Tax Revenues, and the Ministry of Economy and Finance.
Finally, he emphasized the launch of the National Anti-Corruption Strategy, “a joint commitment of all branches of the State to fight against corruption.”
