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LatinNews Daily - 12 May 2020

In brief: Paraguay’s fiscal deficit continues to rise

* Paraguay’s finance ministry has reported that the central government’s fiscal deficit stood at G$4.32bn (US$663.6m) at the end of April. This represents 1.8% of GDP, and follows the 0.8% fiscal deficit recorded for the first quarter of the year. This latest figure confirms the upward trend that has been observed since 2019, when the administration led by President Mario Abdo Benítez adopted an expansionary fiscal policy and increased government spending in response to slowing domestic economic growth. This spending programme has been accelerated and expanded in an effort to mitigate the economic impact of the coronavirus (Covid-19) pandemic. The finance ministry noted that this deficit follows a 46.7% year-on-year increase in public investment in the first four months of the year, totalling G$1.89bn. The ministry forecasts that the fiscal deficit could reach 5% of GDP this year, after the national congress relaxed the 1.5% of GDP fiscal deficit limit set in the fiscal responsibility law (LRF), to give the government more fiscal space to deal with the Covid-19 emergency.

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