Paraguay solidifies its position as one of Latin America’s most financially stable nations, achieving the fourth-lowest country risk rating in the region. This is according to J.P. Morgan’s latest Emerging Markets Bond Index (EMBI), which tracks the performance of U.S. dollar bonds from emerging market countries. Paraguay recorded a country risk premium of just 163 basis points as of late June, trailing only Uruguay, Chile, and Peru in terms of investor confidence.
This achievement reflects Paraguay’s disciplined fiscal approach, and growing economic diversification, distinguishing it from regional peers that grapple with higher borrowing costs.
A competitive advantage in global markets
The remarkably low country risk premium means Paraguay can access international capital markets at borrowing costs of merely 1.63 percentage points above US Treasury bonds. This represents less than half the spread required by Colombia at 349 basis points, and five times lower than Brazil’s current rate.
Such competitive positioning allows Paraguay’s capital Asunción to compete alongside investment-grade economies for international financing, despite maintaining below-investment-grade ratings from two of the three major credit agencies.
Paraguay’s financial credentials received a significant boost in July 2024 when Moody’s awarded the country its first investment-grade rating. While Standard & Poor’s and Fitch Ratings maintain their assessments below investment grade, the nation’s consistent macroeconomic fundamentals continue to attract international investor attention. The minimal six-month variation of just two basis points demonstrates remarkable stability amid global monetary tightening and regional political volatility.
Regional context, and economic fundamentals
Latin America’s broader country risk landscape reveals sharp contrasts between stable and volatile economies. The region’s average risk premium declined from 425 basis points in December 2024 to 401 points by mid-2025, yet individual country performances vary dramatically. While Paraguay maintains its steady course alongside regional leaders, Argentina’s country risk premium soared to 701 points, reflecting ongoing economic uncertainty despite President Javier Milei’s initial stabilisation efforts.
At the opposite end of the spectrum, Bolivia and Venezuela represent cautionary tales with risk premiums of 1,877 and 18,156 basis points respectively. These extreme valuations underscore the importance of Paraguay’s commitment to fiscal discipline and monetary credibility. The nation maintains stable fundamentals whilst neighbours experience turbulence, highlighting the effectiveness of its economic management approach.
Investment implications, and future outlook
Paraguay’s low country risk status translates into tangible benefits for infrastructure development, and long-term investment projects. Reduced borrowing costs enable the government to finance development initiatives more efficiently, potentially accelerating economic growth and modernisation efforts. The country’s growing economic diversification, combined with its credible monetary anchor, positions it well for continued investor confidence.
Financial analysts suggest that maintaining current fiscal discipline, and implementing deeper structural reforms could see Paraguay converge towards the country risk levels of Uruguay and Chile. Such progress would further enhance the nation’s appeal for portfolio investment, and reduce infrastructure financing costs.
The consistency of macroeconomic policies, even during periods of global uncertainty, demonstrates Paraguay’s commitment to economic stability.
The achievement represents more than statistical success. It signals Paraguay’s emergence as a strategic economic hub in an increasingly volatile regional landscape. For investors seeking stable returns and governments pursuing sustainable development, Paraguay’s risk profile offers compelling opportunities in Latin America’s evolving economic ecosystem.
Read more: Paraguay’s Stock Exchange Shatters Trading Volume Record.
