LATIN AMERICA AND THE CARIBBEAN

PARAGUAY

UNITARY COUNTRY

BASIC SOCIO-ECONOMIC INDICATORS

INCOME GROUP: UPPER MIDDLE INCOME

LOCAL CURRENCY: GUARANÍ (PYG)

POPULATION AND GEOGRAPHY

  • Area: 406 752 km2 (2018)
  • Population: 7.133 million inhabitants (2020), an increase of 1.3% per year (2015-2020)
  • Density: 18 inhabitants / km2
  • Urban population: 62.2 % of national population (2020)
  • Urban population growth: 1.7% (2020 vs 2019)
  • Capital city: Asunción (40.5% of national population, 2020)

ECONOMIC DATA

  • GDP: 93.2 billion (current PPP international dollars), i.e., 13 069 dollars per inhabitant (2020)
  • Real GDP growth: -0.6% (2020 vs 2019)
  • Unemployment rate: 7.2% (2021)
  • Foreign direct investment, net inflows (FDI): 623 (BoP, current USD millions, 2020)
  • Gross Fixed Capital Formation (GFCF): 20.1% of GDP (2020)
  • HDI: 0,728 (high), rank 103 (2019)

MAIN FEATURES OF THE MULTI-LEVEL GOVERNANCE FRAMEWORK

Paraguay is a unitary and decentralised republic (1992 Constitution). Legislative power is vested in a bicameral congress, composed of a Chamber of Senators and a Chamber of Deputies. The Chamber of Senators comprises 45 members elected directly for a five-year term by national party lists. The Chamber of Deputies comprises 80 members, directly elected in departmental electoral colleges for a five-year term. Executive power is exercised by the president who is both the head of State and head of government. The president is elected for a non-renewable term of five years.

The country is organised into departments and municipalities (Art.156 of the Constitution). Historically, the political and administrative structure of the country has been characterised by a high level of centralisation. As part of a democratisation process that began in 1989, the country has undergone an incipient decentralisation process to improve the efficiency of the delivery of local public services as well as to promote greater transparency and accountability. The 1992 Constitution recognises the central government and the municipal governments as the sole bodies with decision-making responsibilities for the delivery of public services.

The current legal framework for subnational governments is the 1994 Departmental Law no. 426 and the 2010 Municipal Law no. 3966. Both laws define the legal nature, organisation, competences and resources of departmental and municipal governments respectively. Departmental governments are responsible for coordinating policies and services, both between the central government and the municipalities and between the municipalities themselves. The Municipal Law acknowledges that municipalities have political, administrative and normative autonomy, as well as control over the collection and utilisation of their own revenue, within the limits established by the Constitution.

Despite the adoption of the Municipal Law, progress towards decentralisation has been very slow indeed and the coordination role of departmental governments is minimal. Throughout its entire history until recently, both departmental and municipal executive heads were appointed by the president of the republic. Beginning in 1991 (1990 Electoral Code), municipal governments have been elected by direct suffrage for a mandate of five years. Since 1993, departmental governments have also been directly elected every five years in elections held concurrently with presidential and legislative elections.

TERRITORIAL ORGANISATION

MUNICIPAL LEVEL INTERMEDIATE LEVEL REGIONAL LEVEL TOTAL NUMBER OF SNGs (2022)
262 municipalities (municipios) + 1 capital city
17 departments (departamentos)
Average municipal size:
26 260 inhabitants
263 17 280

OVERALL DESCRIPTION: The country is composed of 17 departments and 262 municipalities plus the capital city of Asunción, which is a municipality independent from the other 17 departments. There are extremely large regional disparities in population density. An overwhelming 97.4% of the population live in the Eastern Region (Región Oriental) which comprises only 39% of the national territory. Within this region, 38% of the population live in Asunción and the Central District. On the other hand, only 2.6% of the population live in the western Chaco region, which comprises 61% of the national territory. Here, departments such as Alto Paraguay and Boquerón have extremely low population densities, of 0.65 inhabitants/km2 and 0.2 inhabitants/km2 respectively.

REGIONAL LEVEL: The departmental government is headed by a governor and a departmental council (junta departmental). Their constitution and functioning are regulated by Article 60 of the 1992 Constitution and by the 1994 Departmental Law no. 426. The governor serves for a single five-year term and may not be re-elected. The departmental council consists of seven to 21 members, depending on its population size and there are no restrictions on the re-election of its members. Although departmental governments are directly elected, the Constitution states that the departmental governor represents the central government in the implementation of national policies. This dual role generates policy challenges and affects multi-level governance, as the governor is accountable both to his or her constituents and to the central government. There is legal provision for a departmental development council to be set up in each department, chaired by the governor and with an advisory function, but this is rarely implemented.

MUNICIPAL LEVEL: The municipal government is headed by an executive mayor, (intendente) and a municipal council (junta municipal). Mayors may be re-elected once for a maximum of two terms but there are no restrictions on the re-election of councillors. By Decree no. 3250 of 2015, municipalities are divided into four groups based on the relative size of their budget compared to the budget of their respective departmental capital. This classification determines the number of councillors to be elected by each municipality. Municipalities in groups 1 and 2 have 12 councillors while those in groups 3 and 4 have nine councillors. Meetings of the municipal council are chaired by its president, selected annually by its members. The mayor attends meetings of the municipal council at the invitation of its members.

HORIZONTAL COOPERATION: According to the 1992 Constitution, departmental governments have responsibility for promoting cooperation between municipalities in their jurisdiction, but this role is rarely carried out. Paraguay has a national municipal association, Organización Paraguaya de Cooperación Intermunicipal (OPACI), founded in 1964. Although its major stated objective, as reflected in its name, is to encourage cooperation between municipalities, its work in this area is minimal. Although associations of municipalities exist in several departments, inter-municipal cooperation is extremely limited. In January 2022, 11 municipalities surrounding and including the capital city, Asunción, established the Asociación de Municipios del Área Metropolitana de Asunción (Amuama). The decision was made at the initiative of the Ministry of Town Planning, Housing and Habitat (MUVH).


Subnational government responsibilities

Formal responsibility for the delivery of most public services is nominally shared between the central and subnational governments. However, due to the longstanding tradition of centralisation, the central government still carries out the major role in delivering basic public services. There are no asymmetric situations at the departmental or municipal level. According to the 1992 Constitution, departmental competences include energy and water provision, departmental planning, inter-municipal cooperation, multi-level coordination in the area of health and education, environmental protection and protection of indigenous populations. Municipal competences include urban planning, public transport, tourism, education, culture, healthcare and social protection, road maintenance and street paving, waste collection, cemeteries, markets and parks (Art. 168 of the Constitution). However, these municipal competences are optional, not mandatory. In practice service delivery by municipal governments is extremely limited and almost non-existent in the case of departmental governments. There are no current plans for the devolution of service delivery responsibilities to subnational governments.

Main responsibility sectors and sub-sectors

SECTORS AND SUB-SECTORS Regional level Municipal level
1. General public services (administration) Cemeteries, street lighting, registration of births and deaths
2. Public order and safety Municipal transport police
3. Economic affairs / transports Economic development through departmental development council Economic development through local development council; Regulation and control of transit and public transportation; Markets; Bus stations; Slaughterhouses; Tourism
4. Environment protection Waste collection and disposal; Public squares and parks
5. Housing and community amenities Urban planning; Road maintenance; Street paving and street lighting
6. Health Food hygiene; Health planning through local health council
7. Culture & Recreation Sports; Theatre; Public libraries
8. Education Education infrastructure (shared) Education infrastructure (shared); Education planning through local education council
9. Social Welfare School meals Social care for children and youth


Subnational government finance

Scope of fiscal data: municipalities SNA 2008 Availability of fiscal data:
Low
Quality/reliability of fiscal data:
Low

GENERAL INTRODUCTION: Subnational government finance is regulated by the 1994 Departmental Law no. 426; the 2010 Municipal Law no. 3966; Law no. 3984 of 2010 on the Distribution and Deposit of Royalties and Compensation to Departmental and Municipal Governments, subsequently amended in article 2 by Law no. 4841 of 2012; as well as Law no. 4758 promulgated in 2012 which created the National Fund for Public Investment and Development (FONACIDE). Municipalities enjoy greater fiscal powers compared to departments. They are empowered to set the level of local taxes, except property tax, and to borrow from credit markets. They make up the bulk of subnational government expenditure and revenue in Paraguay. Conversely, departments cannot collect taxes and depend exclusively on intergovernmental fiscal transfers (IGFTs) from other levels of government.

Municipal governments are legally mandated to send reports on their finances for every budget cycle to the Ministry of Finance. However, the process of collecting and processing this municipal data is still rudimentary. The 2020 Public Finance Report issued by the Ministry of Finance does include local government finances but there is continuing difficulty in collecting such financial data. The introduction to the 2020 report noted that 39 of the then 255 municipalities in the country had not complied with the legal requirement to submit an annual financial statement to the ministry. They included the Municipality of Asunción, generally believed to account for around 25-30% of total municipal expenditure in the country. In response to an information request, the Central Bank stated that, in preparing the national accounts, it imputes a value for the expenditure of the Municipality of Asunción equivalent to 2% of general government expenditure.

As a result of the above shortcomings, municipal government data is currently insufficiently incorporated in the integrated system of financial administration (sistema integrado de administración financiera or SIAF) of the Ministry of Finance. A fiscal reform programme supported by the Inter-American Development Bank envisages the gradual incorporation of municipal budgets in the SIAF, thereby contributing to local fiscal transparency and accountability.

Subnational government expenditure by economic classification

2020 Dollars PPP / inhabitant % GDP % general government % subnational government
Total expenditure 122 0.9% 1.1% 100.0%
Inc. current expenditure 95 0.7% - 77.7%
Compensation of employees 39 0.3% 3.1% 31.5%
Intermediate consumption 11 0.1% 9.0% 9.4%
Social expenditure 9 0.1% 4.6% 7.4%
Subsidies and current transfers 18 0.1% 1.0% 14.6%
Financial charges 0 0.0% 0.1% 0.2%
Others 18 0.1% - 14.6%
Incl. capital expenditure 27 0.2% - 22.3%
Capital transfers - - - -
Direct investment (or GFCF) - - - -

% of general government expenditure

  • Total expenditure
  • Compensation of employees
  • Current social expenditure
  • Direct investment
  • 1.1%
  • 3.1%
  • caché
  • 4.6%
  • caché
  • caché
  • caché
  • caché
  • -
  • 0%
  • 2%
  • 4%
  • 6%
  • 8% 10%

SNG expenditure by economic classification as a % of GDP

  • Compensation of employees
  • Intermediate consumption
  • Current social expenditure
  • Subsidies and other current transfers
  • Financial charges + other current expenditures
  • Capital expenditure
  • 1% 0,8%
  • 0,6%
  • 0,4%
  • 0,2%
  • 0%
  • caché
  • 0.29%
  • 0.09%
  • 0.14%
  • 0.14%
  • 0.21%

% of general government expenditure

  • Total expenditure
  • Compensation of employees
  • Current social expenditure
  • Direct investment
  • 1.1%
  • 3.1%
  • caché
  • 4.6%
  • caché
  • caché
  • caché
  • caché
  • 0%
  • 0%
  • 2%
  • 4%
  • 6%
  • 8% 10%

SNG expenditure by economic classification as a % of GDP

  • Compensation of employees
  • Intermediate consumption
  • Current social expenditure
  • Subsidies and other current transfers
  • Financial charges + other current expenditures
  • Capital expenditure
  • 1% 0,8%
  • 0,6%
  • 0,4%
  • 0,2%
  • 0%
  • caché
  • 0.29%
  • 0.09%
  • 0.14%
  • 0.14%
  • 0.21%

EXPENDITURE: Total reported municipal government expenditure in 2020 was PYG 2 258 140 million (USD 871 PPP million), equivalent to only 1.1% of total general government expenditure, at PYG 206 591 676 million (USD 79.703 PPP million). This was far below the average of the Latin American region. Total departmental expenditure in the same year reached PYG 1 135 071 million (USD 438 PPP million), equivalent to only 0.5% of total general government expenditure. As a result, combined subnational government expenditure in 2020 was equivalent to 1.6% of total general government expenditure. Municipal governments accounted for 66% of total subnational government expenditure and departmental governments accounted for 34%.

DIRECT INVESTMENT: In 2020, local governments allocated 22% of their expenditure to capital investment. Virtually all capital expenditure is financed from two IGFTs deriving from revenue-sharing arrangements from the operation of two binational hydroelectric plants. The so-called royalty transfer, created by Law no. 3984 of 2010, requires municipalities to spend 80% of the received transfer on capital expenditure, although the sectoral distribution is not earmarked. Some 80% of the fund received under the FONACIDE transfer created by Law no. 4758 of 2012 is earmarked for the education sector and is disbursed in coordination with the Ministry of Education and Sciences. The law requires that 50% of the funds received are spent on educational infrastructure and 30% for school meals, while 20% is not earmarked.

Subnational government expenditure by functional classification

ⓘ No detailed data available for this country

Most Paraguayan municipalities can only finance a limited range of activities in the areas of community amenities (public squares, parks and street paving), environmental protection (waste collection and disposal) as well as economic activities (bus stations and markets) and in some cases social protection (welfare assistance). The majority of municipalities spend most of their budget on general administration.

Subnational government revenue by category

2020 Dollars PPP / inhabitant % GDP % general government % subnational government
Total revenue 123 0.9% 1.2% 100.0%
Tax revenue 40 0.3% 3.0% 32.7%
Grants and subsidies 53 0.4% - 43.1%
Tariffs and fees 8 0.1% - 6.6%
Income from assets 2 - - 1.3%
Other revenues 20 0.2% - 16.3%

% of revenue by category

  • 50% 40%
  • 30%
  • 20%
  • 10%
  • 0%
  • 32.7%
  • 43.1%
  • 6.6%
  • 1.3%
  • 16.3%
  • Tax revenue
  • Grants and subsidies
  • Tariffs and fees
  • Property income
  • Other revenues

SNG revenue by category as a % of GDP

  • Tax revenue
  • Grants and subsidies
  • Tariffs and fees
  • Property income
  • Other revenues
  • 1% 0,8%
  • 0,6%
  • 0,4%
  • 0,2%
  • 0%
  • 0.31%
  • 0.4%
  • 0.15%

% of revenue by category

  • 50% 40%
  • 30%
  • 20%
  • 10%
  • 0%
  • 32.7%
  • 43.1%
  • 6.6%
  • 1.3%
  • 16.3%
  • Tax revenue
  • Grants and subsidies
  • Tariffs and fees
  • Property income
  • Other revenues

SNG revenue by category as a % of GDP

  • Tax revenue
  • Grants and subsidies
  • Tariffs and fees
  • Property income
  • Other revenues
  • 1% 0,8%
  • 0,6%
  • 0,4%
  • 0,2%
  • 0%
  • 0.31%
  • 0.4%
  • 0.15%

OVERALL DESCRIPTION: Compared to other countries in the region, municipalities in Paraguay depend heavily on locally generated sources of finance, such as taxes and fees. On the contrary, departments are almost totally dependent upon transfers from central governments and have no source of own revenue. Departments receive a general grant from central government but, uniquely in Latin America, municipalities do not receive a general grant. However, both municipalities and departments receive considerable fiscal transfers in the form of a share of the royalties received from binational hydroelectric projects.

TAX REVENUE: Department governments have no source of own revenue and are funded entirely by fiscal transfers from central government and municipalities. Since the adoption of the 1992 Constitution, municipal governments are in charge of collecting urban and rural property tax (Art. 169). Such property taxes are the main own-source revenues for municipalities. In 2016 property taxes collected by municipal governments represented 48% of subnational government total tax revenue, 18% of local revenue and 0.3% of GDP, proportions that remained roughly the same in 2020. Municipalities retain 70% of the property tax revenue that they collect, while 15% is transferred to departments, and the remaining 15% is redistributed to poorer (group 4) municipalities within the same department. Other municipal taxes include taxes for unused urban land (waste land), taxes on specific services (such as advertising or public transportation), industry and business licenses, driving licences, and an annual vehicle road tax. In 2020 only 10 municipalities had facilities for online payment of taxes and fees. Because not all municipal budgets are compliant with the integrated system of financial administration (SIAF), it is difficult to accurately measure the contribution of local government to national revenue mobilisation. However, in 2020 the tax revenue of municipal governments accounted for 3.0% of general government tax revenue and 0.3% of GDP.

GRANTS AND SUBSIDIES: Each department receives a general grant from central government as well as shared taxes (15% of VAT collected in its jurisdiction, 15% of property tax collected in its jurisdiction and 30% of the tax on gambling collected in its jurisdiction). The revenue collected from shared VAT is earmarked for health, education and public works (Art. 34 of 1994 Departmental Law). In 2020 the combined general grant received by all departments accounted for 53.9% of their total revenue. General government transfers to municipalities are insignificant and are limited to one shared tax (30% of the gambling tax) and a specific transfer to municipalities in the Canindeyú Department as compensation for the loss of waterfalls as a consequence of the construction of the Itaipú Dam.

Both departments and municipalities receive earmarked transfers from two national hydro plant royalty funds. Departments receive 10% of the royalty fund collected from binational hydro projects (5% for those departments affected by the hydro dams and 5% for those that are not) (Law no. 3984). 80% of these transfers are earmarked for capital expenditure, 10% for sustainable development, and 10% for current expenditure. Municipalities receive 40% of the royalty fund (15% for municipalities affected by the hydro dams and 25% for municipalities not affected) (Law no. 4841). Within each of these two categories, 50% of these transfers are distributed equally between all municipalities and 50% according to the population size of each municipality. As in the case of departments, 80% of the transfers are earmarked for capital expenditure, 10% for sustainable development, and 10% for current expenditure.

In addition, departments receive 5% of the enhanced royalty payments from Itaipú Binacional channelled through the National Fund for Public Investment and Development – FONACIDE (Law no. 4758), which are distributed between departments in a similar manner to royalty funds. Some 50% of the FONACIDE transfers are earmarked for education infrastructure, 30% for school meals, and 20% for general investment purposes. Municipalities also receive 20% of the FONACIDE royalty fund (7.5% for municipalities affected by the construction of Itaipú dam and 12.5% for those not affected). Within each of these two categories, 50% of the transfers are distributed equally between all municipalities and 50% according to the population size of each municipality. As in the case of departments, 50% of the transfers are earmarked for education infrastructure, 30% for school meals, and 20% for general investment purposes.

In 2020 departments received a total intergovernmental fiscal transfer (IGFT) of PYG 1 237 882 million (USD 478 PPP million) with the following breakdown: general grant – 54%, royalties – 15%, FONACIDE – 12%, VAT – 8%, gambling tax – 2%, and a special COVID-19 reactivation grant – 9%. In the same year, municipalities received a total IGFT of PYG 1 242 030 million (USD 479 PPP million) of which 58% came from royalties and 29% came from FONACIDE. The combined IGFT in 2020 was PYG 2 479 912 million (USD 957 PPP million), of which departments received 50% and municipalities received 50%.

OTHER REVENUE: Other revenues for municipalities include fines, service fees (public lighting, cemeteries, waste collection fees, car parking fees), driver’s licenses, fees for the purchase/sale of real estate, and charges for the rental of municipal land. The rates of tariffs and fees are closely regulated by the central government. These revenues are of greatest benefit to the largest cities such as Asunción, Ciudad del Este and Encarnación, which have greater capacity to collect them, in particular car parking fees.

Subnational government fiscal rules and debt

2020 Dollars PPP / inh. % GDP % general government debt % SNG debt % SNG financial debt
Total outstanding debt (consolidated) 1 0.0% 0.0% 100% -
Financial debt 1 0.0% 0.0% 87.8% -
Currency and deposits - - - - -
Bonds / debt securities 1 - - 70.3% -
Loans 0.1 - - 4.4% -
Insurance pensions - - - - -
Other accounts payable 0.2 - - 12.2% -

SNG debt by category as a % of total SNG debt

  • Currency and deposits: -
  • Bonds/Debt securities: 70,26%
  • Loans: 4,4%
  • Insurance pensions: -
  • Other accounts payable: 12,19%

SNG debt by level of government as a % of GDP and as a % of general government debt

  • 1% 0,8%
  • 0,6%
  • 0,4%
  • 0,2%
  • 0%
  • 0.01%
  • 0.03%
  • % of GDP
  • % of GG Debt

SNG debt by category as a % of total SNG debt

  • Currency and deposits: 0%
  • Bonds/Debt securities: 70,26%
  • Loans: 4,4%
  • Insurance pensions: 0%
  • Other accounts payable: 12,19%

SNG debt by level of government as a % of GDP and as a % of general government debt

  • 1% 0,8%
  • 0,6%
  • 0,4%
  • 0,2%
  • 0%
  • 0.01%
  • 0.03%
  • % of GDP
  • % of GG Debt

FISCAL RULES: As provided for in the 1992 Constitution, the office of the comptroller general of the Republic is in charge of controlling and auditing the reports submitted by departmental and municipal governments. However, due to shortage of funds, it has no branches throughout the country and only audits around one-fifth of the municipalities in the country. At the municipal level, the mayor must submit the proposed revenue and expenditure budget to the municipal council for consideration and approval. Once the ordinance has been promulgated, the municipal council must remit the draft budget to the departmental government and to the office of the comptroller general of the Republic. A similar process applies at the departmental level, where departmental governors are responsible for presenting the draft budget to the departmental council for approval before submitting it to the Ministry of Finance. In October 2020 the Supreme Court rejected an appeal launched by 24 municipalities back in 2004 that they should not be covered by the public procurement law on the grounds that this infringed municipal autonomy.

From 2018 the Ministry of Finance requires all departments and municipalities to submit an annual statement of income and expenditure by end-February of the following year. If subnational governments do not comply with this requirement, the disbursement of inter-governmental fiscal transfers by the Ministry of Finance can be halted. In addition, subnational governments must submit three financial statements to the finance ministry during the year, every four months.

The Fiscal Responsibility Law no. 5098 of 2013 provides that the annual fiscal deficit of the general government, including municipal and departmental governments, shall not exceed 1.5% of the estimated GDP. However, this limit was temporarily suspended in 2020 and 2021 because of the COVID-19 pandemic.

DEBT: According to Article 78 of the 2010 Municipal Law, municipalities are able to borrow, subject to the approval of the municipal council. Municipalities may contract loans for the acquisition of capital assets, the establishment of municipal corporations to provide local services, and for the provision of works and services when they require extraordinary resources. Law no. 1535 of 1999 on the financial administration of the State further stipulates that public debt can only be used to finance productive investments, response to national emergencies, public administration reforms or for the refinancing of public debt. However, in practice borrowing by departmental and municipal governments is minimal and is strongly controlled by central government.



The impact of the COVID-19 crisis on subnational government organisation and finance

TERRITORIAL MANAGEMENT OF THE CRISIS: No coordination unit exists between central and local governments and one was not created in response to the pandemic.

In November 2020 the central government approved an ambitious economic reactivation plan, Plan de Recuperación Económica Ñapu'ã Paraguay, with a projected cost of USD 2.51 million. The plan was drawn up with strong input by the donor community. The main elements of the plan were (i) social protection in the form of emergency cash transfers to those most affected by the pandemic, (ii) labour-intensive public investment, (iii) public management reforms in the direction of the “transformation of the state” towards greater social inclusion, and (iv) subsidised credit. In March 2021, the Corporación Andina de Fomento (CAF) approved a USD 250 million loan to Paraguay to contribute to the expected USD 350 million in external finance required for the plan. However, a further USD 460 million in external financing was needed to enable the Banco Nacional de Fomento (BNF) and the Agencia Financiera de Desarrollo (AFD) to implement the stated goals in subsidised credit. In practice, the plan mainly provided a USD 1.16 million boost to highway construction, maintenance and road widening. This was channelled exclusively through the Ministry of Public Works with minimal involvement of local governments.

However, in 2020 the Ministry of Health carried out a survey to establish the extent of municipal participation in preparing for and responding to the pandemic. In total, 54% of local governments responded to the survey with data. This enabled the ministry to sign agreements with those frontier municipalities at greatest risk of virus transmission. Local measures were taken in line with the communication campaign of the ministry to promote personal protection, such as large billboard information and recommended municipal ordinances on physical distancing.

EMERGENCY MEASURES TO COPE WITH THE CRISIS AT THE DIFFERENT LEVELS OF GOVERNMENT: In 2020, in response to the COVID-19 pandemic, the government temporarily suspended the 2013 Fiscal Responsibility Law requiring that the annual fiscal deficit of the general government, including municipal and departmental governments, should not exceed 1.5% of GDP.

Following an extreme national shortage of COVID-19 vaccines, five municipalities announced in March 2021, plans to import SINOVAC vaccines for their own use. But the plan was later dropped. In response to the dire national shortage of intensive care units (ICUs) exposed by the pandemic, several municipalities in the Central Department around Asunción, the epicentre of the pandemic, constructed their own emergency specialised COVID-19 wards and oxygen plants. They also provided emergency food assistance to relatives of COVID-19 patients, as well as psychological support to those who had lost loved ones. With municipal cemeteries saturated, local government authorities purchased extra land to ensure a dignified burial for patients who died from COVID-19.

IMPACTS OF THE CRISIS ON SUBNATIONAL GOVERNMENT FINANCE: In May 2020 Law no. 6528 temporarily amended the use of IGFTs to departments and municipalities from the royalty fund. The earmarking for capital expenditure was reduced from 80% to 20% of funds received. Instead, a maximum of 40% could be used for purchase of emergency food relief and 40% for current expenditure.

The surge in emergency inter-governmental fiscal transfers arising from the pandemic led to a noticeable increase in subnational government corruption. In October 2021, a Ministry of Finance investigation called “Facturación 2” revealed that 17 municipalities and one departmental government had paid over USD 10 million to suppliers who had presented false and ‘cloned’ invoices issued under the name of an 80-year-old citizen who was not registered with the tax authorities. In January 2022, the mayor of Asunción and the governor of the Department of Caazapá were under investigation for over-invoicing and double-invoicing of projects financed under the COVID-19 relief programme.

ECONOMIC AND SOCIAL STIMULUS PLANS: In 2020, the Paraguayan government approved one of the largest fiscal packages for economic recuperation in Latin America, equivalent to 5.5% of GDP, considerably higher than the regional average of 3.2% of GDP. This package was embedded in the Health Emergency Law no. 6524 of May 2020 (Ley de Emergencia Sanitaria), comprising a total of USD 1 600 million (current) from multilateral lending agencies and international bond issues, as well as USD 390 million (current) from domestic bond issues. Of this total, only US$10 million was earmarked for disbursement through departmental governments and none through municipal governments. Law no. 6641 of September 2020 authorised these special COVID-19 reactivation grants in the form of USD 1 million (current) to each of the 17 departmental governments, of which PYG 108 494 million (USD 42 million) was disbursed in 2020. The grants were earmarked for labour-intensive capital investment in public works, such as road building, 20% in public health infrastructure, and 20% in operational expenditure. No corresponding general emergency grants were awarded ‘across the board’ to municipalities.

Bibliography


Socio-economic indicators

Source Institution/Author Link
World development indicators World Bank
World population prospects United Nations
Demographic and Social Statistics United Nations
Unemployment rate by sex and age ILOSTAT
Human Development Index (HDI) United Nations Development programme; Human Development Reports

Socio-economic indicators

Source Institution/Author
World development indicators World Bank
Link: https://data.worldbank.org/indicator/
World population prospects United Nations
Link: https://population.un.org/wpp/
Demographic and Social Statistics United Nations
Link: https://unstats.un.org/unsd/demographic-social/index.cshtml
Unemployment rate by sex and age ILOSTAT
Link: https://ilostat.ilo.org/data/
Human Development Index (HDI) United Nations Development programme; Human Development Reports
Link: http://hdr.undp.org/en/content/human-development-index-hdi

Fiscal data

Source Institution/Author Link
INFORME FINANCIERO 2020, TOMO 1 Ministerio de Hacienda

Fiscal data

Source Institution/Author
INFORME FINANCIERO 2020, TOMO 1 Ministerio de Hacienda
Link: https://www.hacienda.gov.py/web-contabilidad/index.php?c=306

Other sources of information

Source Institution/Author Year Link
La descentralización y su estudio: Una mirada de los análisis recientes a nivel regional y nacional. Investigación para el Desarrollo 2015 -
El Gobierno local en Paraguay: un análisis comparativo a través de diez elementos. Nickson, A, ID (Investigación para el Desarrollo) / AJUMPA (Asociación de Juntas Municipales). 2016 -
Respuesta de la OPS/OMS a la COVID-19 en Paragua Organización Panamericana de la Salud 2021
The development of participatory institutions in Paraguay: a tool for democratization or state control? Setrini, G. and Duart-Recalde, L., Cahiers des Amériques latines 90, Le Paraguay : 30 ans après Stroessner 2019 -
La otra cara de la descentralización: funciones de la descentralización en el proceso político paraguayo Verdecchia, J. FLACSO Paraguay. 2019 -

Other sources of information

Source Institution/Author Year
La descentralización y su estudio: Una mirada de los análisis recientes a nivel regional y nacional. Investigación para el Desarrollo 2015
-
El Gobierno local en Paraguay: un análisis comparativo a través de diez elementos. Nickson, A, ID (Investigación para el Desarrollo) / AJUMPA (Asociación de Juntas Municipales). 2016
-
Respuesta de la OPS/OMS a la COVID-19 en Paragua Organización Panamericana de la Salud 2021
Link: https://www.paho.org/es/documentos/respuesta-opsoms-covid-19-paraguay-enero-diciembre-2020
The development of participatory institutions in Paraguay: a tool for democratization or state control? Setrini, G. and Duart-Recalde, L., Cahiers des Amériques latines 90, Le Paraguay : 30 ans après Stroessner 2019
-
La otra cara de la descentralización: funciones de la descentralización en el proceso político paraguayo Verdecchia, J. FLACSO Paraguay. 2019
-

<