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USAID Information:
External Links:
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Paraguay
Please note: All linked documents are in PDF format
| Objective |
SO Number |
FY 2004 |
FY 2005 |
FY 2006 |
| Democracy & Governance |
526-004 |
4,907 |
4,805 |
5,401 |
| Environment |
526-005 |
928 |
929 |
1,212 |
| Reproductive Health |
526-006 |
2,325 |
1,980 |
1,477 |
| Economic Growth |
526-007 |
1,287 |
990 |
2,725 |
| Total (in thousands of dollars) |
9,447 |
8,704 |
10,815 |
|
The Development Challenge: Paraguay is undergoing a historic transformation towards consolidating its democracy and promoting a fair and licit market economy, both of which are primary U.S. national interests in Paraguay. During the past three years, Paraguay has also been a valuable U.S. ally in the war on terrorism. The past 15 years, since the fall of the dictatorship, have seen the adoption of a new constitution, the establishment of freedom of expression, the development of a transparent and free electoral process, improvements in the judicial system to permit public scrutiny of legal cases, and the defense of democratic institutions in the face of severe challenges. These challenges include several coup attempts, the assassination of a Vice President and the resignation of a President. With the completion of the first full year of President Duarte's Administration, which has taken critical steps to fight corruption and re-activate the economy, the prospects for improvement in democratic practices and a legitimate market economy have improved significantly.
Under the Duarte Administration, serious problems such as poverty, corruption, environmental degradation, and lack of effective basic services to Paraguay's citizens are being addressed. The administration continues to make sound decisions which demonstrate a serious commitment to fighting corruption, stabilizing the economy and beginning to address the concerns of the growing ranks of the poor. Also, President Duarte provided strong leadership in pursuing an impeachment process that resulted in the removal of six corrupt Supreme Court justices and the replacement with justices who were selected in an open and transparent manner for the first time in Paraguayan history.
Many challenges continue to confront the Administration. During 2004, the country experienced its eighth consecutive year in which per capita income was stagnant or declined. Paraguay's external debt is approximately $2.3 billion, almost 40% of gross domestic product. While Paraguay has historically pursued conservative macroeconomic policies, the economic tribulations of Brazil and Argentina (Paraguay's two most important trading partners) and weak political will of the previous Administration combined to produce worsening levels of budget deficits, and expedient short-term borrowing. However, during the Duarte Administration, budget deficits were controlled and a budget surplus developed.
Thousands of landless farmers have clamored for land and illegally invaded private properties. Perceptions of corruption are very high by Latin American standards, while foreign investment in Paraguay is the lowest in Latin America. The donor community and knowledgeable observers note important changes directly attributable to strong anticorruption measures taken by President Duarte. Paraguay is committed to implementing the reforms that are important to making the government more honest and responsible and to improving the policy and regulatory environment for business, reducing red tape and assuring fair and predictable rules of the game. Notwithstanding the serious challenges, in November 2004, the Millennium Challenge Corporation designated Paraguay a Threshold Country, recognizing both the serious commitment and the significant measurable progress that the Duarte Administration has made in addressing Millennium Challenge Account (MCA) policies and precepts during its initial 14 months in office.
Mid- and long-term sustainable development in Paraguay is also threatened by the indiscriminate exploitation of land, water, and wildlife resources. Sustainable development is severely threatened by the depletion of Paraguay's rich endowment of natural resources. Timber reserves have been nearly exhausted. Much of the once rich topsoil of the eastern border region (largely uncultivated until the 1970s) is now considered to be severely eroded. The eastern border region sits upon the Guarani aquifer, the largest underground water aquifer on the continent, and is being threatened by unchecked deleterious land use practices. Because watersheds have been negatively affected by deforestation and contamination, surface water flow volumes have decreased considerably in the last 20 years. Public authorities have been slow to respond to these challenges because of inadequate capacity.
High maternal mortality rates contribute to poverty, and better reproductive health services are needed. Almost 40% of pregnant women do not receive adequate pre-natal care. Many citizens also lack access to other basic services, such as education, potable water, sewerage systems, solid waste collection, and basic infrastructure. Although national and local governments are hard pressed to adequately provide these basic services, there has been some improvement and some local governments are struggling to compensate for deficiencies in service provision by the national government.
Although many challenges lie ahead, the Government of Paraguay is demonstrating commitment to reform, economic stabilization, improving service provision and fighting corruption. USAID has an historic opportunity to play an important role in helping Paraguay improve its situation by supporting the Government of Paraguay's commitment for change.
The USAID Program: USAID is requesting FY 2005 and FY 2006 for four ongoing programs that focus on economic growth, reproductive health, environmental initiatives and the strengthening of democracy. Two major themes that link these initiatives are: 1) a vibrant, pluralistic civil society as the basis for democratic governance, improved trade capacity (economic growth), improved health and provision of services and management of natural resources; and 2) government responsiveness, accountability, and accessibility to citizens strengthened through the decentralization of power and authority to local levels and measures which promote honesty and transparency throughout all levels of government.
Other Program Elements: The Global Development Alliance (GDA) awarded a grant that includes Paraguay as one of the countries in which the program provides information technology training and prepares graduates for employment. The GDA Secretariat also provided funding for an alliance activity aimed at promoting good governance and anticorruption. Through the LAC Regional program, a civil society outreach activity on the Free Trade Agreement of the Americas and on the benefits of free trade agreements in general will continue through FY 2005. The LAC Regional program also aims to strengthen civil society organizations to promote transparency and human rights in Paraguay. Finally, a USAID centrally funded grant supports cooperative development in the poorest regions of the country.
Other Donors: USAID has been very active in organizing a previously disjointed donor community and continues to be successful in having other donors build upon its pioneering activities. Donor coordination at a sectoral level in Paraguay is improving. USAID has organized donor coordination activities related to decentralization, judicial reform, environment, and health and is participating in donor programs related to competitiveness and adolescents.
In the health sector, the World Bank, the United Nations Population Fund (UNFPA) and USAID are collaborating with the Ministry of Health to implement a demographic and health survey. This is a major achievement in terms of donor coordination and one that can serve as a model for other donor-coordinated activities. At the same time, USAID and UNFPA provided technical assistance to the Ministry of Health to develop the National Reproductive Health Plan.
Japan is Paraguay's largest bilateral donor, followed by the United States, Germany, and Spain. The major bilateral donors and their interests are: Japan (agriculture and health), Germany (state reform and natural resources), Spain (education and cultural support), and Taiwan (housing). The Inter-American Development Bank, the World Bank, the European Union, various United Nations agencies, including the Pan-American Health Organization, and the Global Environmental Facility, play a major role in the international development community involvement in Paraguay.
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