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Paraguay will strengthen public policy and fiscal management to tackle COVID-19

WASHINGTON, USA – The Inter-American Development Bank (IDB) approved today a loan for Paraguay to strengthen the efficiency and effectiveness of its public policy and fiscal management to address the public health and economic crises triggered by COVID-19.

The project calls for a total of $210 million in lending, of which $160 million will be financed by the IDB and $50 million by the Korea Infrastructure Development Co-Financing Facility for Latin America and the Caribbean, or KIF, which is administered by the IDB.

Among other policy measures, the project will support temporary transfer programs that will benefit more than 300,000 low-income families, allowing them to buy food, medicine and basic goods, and a 40 percent increase in the country’s health care budget so as to take on the public health emergency caused by COVID-19.

The implementation of the project will also include measures to safeguard the incomes of informal workers, through subsidies and other tools to support micro, small and medium-sized enterprises (MiPyMES). In addition, it will provide liquidity to companies affected by the economic consequences of the pandemic.

The project also aims to help the State in economic and fiscal terms in the post-pandemic period by supporting reforms designed to boost the efficiency of the public sector in areas such as public health, education, social protection, fiscal matters and government institutions.

The operation will also encourage knowledge exchange between the governments of Paraguay and South Korea based on the latter’s valuable experience in tackling the pandemic.

The $160 million loan financed by the IDB is over 20 years, with a grace period of five and a half years and an interest rate based on LIBOR. The KIF co-financing of up to $50 million will be over 25 years, with a grace period of seven years and an interest rate of 2.5 percent.



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