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Prudent fiscal and monetary policies have led Paraguay to positive growth, and the country's banking system continues to remain sound and profitable, the International Monetary Fund (IMF) said in a statement.
"In recent years, Paraguay has strengthened its institutional framework and implemented generally prudent fiscal and monetary policies. These policies have led to positive growth and employment outcomes and helped reduce inflation," mission chief Lisandro Ábrego said after the IMF concluded its annual mission to the country to meet with government officials and the private sector and discuss how to help with economic growth.
"Going forward, it is important to keep improving policy formulation and implementation, and strengthening Paraguay's institutions."
"While growth has normalized after a sharp rebound in 2010, negative shocks have had an impact this year. After expanding 15% in 2010, growth slowed to 4.5% in the first half of the year, reflecting mainly the return of agricultural growth to more normal levels, cement shortfalls and problems with accessing key beef export markets," Ábrego said.
The official also said the authorities should move quickly to fill existing vacancies on central bank BCP's board and recapitalize the institution, as this is a key ingredient to further enhancing its independence and ability to implement monetary policy effectively. Both measures are critical to facilitate the central bank's move to an inflation-targeting regime.