Brazil & Southern Cone - October 2026

Paraguay’s President Santiago Peña has done much to boost his country’s economic credentials, but he has also been criticised as being aloof to the needs of many ordinary citizens. He recently got another taste of the simmering discontent resulting from the rising cost of living and tight government purses. In August, Paraguay’s doctors’ union (Sinamed) led strikes and protest action, demanding more pay and denouncing a shortage of medical supplies and poor working conditions. Physicians and other healthcare workers in the public sector resigned en masse.

The Peña administration, which won investor praise and obtained a series of credit rating upgrades due to the fiscal discipline it demonstrated since taking office in August 2023, had resisted Sinamed’s demands out of concern they would put a further dent in public coffers. Sinamed estimated its pay demands would have cost the government US$127m, which unions argued was not even 1% of the country’s budget.

But after doctors went on a nationwide strike from 24-28 August and congress created a special committee on 7 September to look into the matter, Peña realised it was time to make concessions. On 13 September he replaced his health minister, María Teresa Barán Wasilchuk (2023-2026), with Isaías Fretes, who had been head of the Instituto de Previsión Social (IPS), Paraguay’s social security institute. “We must improve management, be closer to the people, and ensure that every Paraguayan receives the attention they deserve,” Peña wrote on X when announcing the ministerial change.

A day later the government reached an agreement with Sinamed, which included a G$2m (US$333) pay increase for doctors, compared with the G$3m originally demanded. Peña praised the agreement in a statement on social media, saying: “I want more doctors, a stronger public health system, and a Paraguay where every citizen receives the care they deserve.”

The episode is in line with Peña’s policy shift in the second half of his tenure, from hardcore fiscal discipline that saw unpopular belt-tightening measures, to increased government spending and social welfare. The change of direction came after bigwigs in Peña’s Asociación Nacional Republicana-Partido Colorado (ANR-PC) aired concerns that the government’s budgetary zeal was undermining its electoral prospects, particularly ahead of the 4 October municipal elections, where the opposition notched some victories, including winning in Asunción.

Based on the country’s economic performance, Peña and his party should be doing fantastically well. GDP is expected to grow 4.4% this year, according to projections by the International Monetary Fund (IMF). That is well above the projection for most countries in the region. Meanwhile, the IMF expects Paraguay’s inflation this year to be around 3.5%, on target with the central bank’s goal.

And yet the popularity of the 47-year-old economist and former central banker has fallen, as the country’s macro-economic success has failed to trickle down to many ordinary citizens. His government has been criticised for delays in social policies, poor public transport, and the lack of institutional transparency. On 30 September credit ratings agency Fitch also cited institutional weaknesses as one of the reasons it fell short of granting Paraguay investment grade status, maintaining its rating of ‘BB+’, still a notch below investment grade.

Support for healthcare

Indicative of his attempts to appease concerns of the sector, Peña said on 13 September that healthcare would continue to be a “top priority” for his government. He highlighted that, over the past three years, the government had allocated more than US$500m to healthcare infrastructure and opened two new state-of-the-art hospitals, with seven more under construction. In addition, he said the government had earmarked US$195m for the national cancer institute (Incan), which he described as an increase of approximately 290% compared to 2023. By 2027, he said his administration will have allocated US$760m for medications and medical supplies, which he claimed would be an increase of nearly 200% compared to his first year in office.