{
  "id": 3346708,
  "title": "Paraguay Faces Fiscal Crossroads as Deficit Cap Slips to 2028",
  "url": "https://urgent.news/2026/08/25/paraguay-faces-fiscal-crossroads-as-deficit-cap-slips-to-2028",
  "topic": "finance",
  "section": "Finance & Markets",
  "published": "2026-08-25T20:27:40.000Z",
  "source": {
    "name": "The Rio Times",
    "slug": "the-rio-times",
    "url": "https://www.riotimesonline.com/paraguay-fiscal-crossroads-deficit-2028-2026/"
  },
  "original_language": "en",
  "account": "Paraguay faces a critical fiscal decision as its deficit cap approaches in 2028. The Paraguayan government must choose between a gradual adjustment or a sharp cut in 2028 to meet the 1.5% Fiscal Responsibility Law cap. According to projections from the Ministry of Economy and Finance, the deficit is expected to be 3.2% of GDP in 2026 and 3.9% in 2027, before returning to the 1.5% cap in 2028.\n\nThe postponement of the 1.5% target, announced on 7 August 2026, means that Paraguay will have to manage deficits well above the cap for two more years. This means that the country will be facing a deficit of 2.4 percentage points to be corrected, which could equate to around US$1.5 billion. The economic impact of such a correction could reduce growth by 1.5 to 2.5 percentage points in 2028.\n\nParaguay’s tax revenue has fallen short of expectations, contributing to the fiscal shortfall. Analysts suggest that a comprehensive tax reform could help broaden the tax base and strengthen tax administration. Protecting public investment and including escape clauses or a cyclical rule in the Fiscal Responsibility Law are also options on the table. However, these measures must be combined with other revenue and spending measures to ensure a credible path towards meeting the deficit target.\n\nDespite the challenges, Paraguay still has access to international capital markets. The sovereign has reopened its 2055 bond at a yield of 6%, allowing the government to choose a gradual path. Nevertheless, the country must ensure a credible path to meet the 1.5% deficit cap to maintain investor confidence. The decision made in the coming months will determine whether Paraguay's fiscal crossroads ends in orderly consolidation or in an abrupt 2028 shock.",
  "summary": "Paraguay projects deficits of 3.2% of GDP in 2026 and up to 3.9% in 2027, returning to the 1.5% legal cap only in 2028. Economist Wildo González frames the choice as gradual correction now or a US$1.5 billion adjustment later. The post Paraguay Faces Fiscal Crossroads as Deficit Cap Slips to 2028 appeared first on The Rio Times .",
  "key_points": [],
  "editors_take": null,
  "illustration": null,
  "coverage": {
    "outlets": 1,
    "also_reported_by": []
  },
  "ai_generated": true,
  "disclaimer": "Summaries, key points and the editor’s take are written by software from other outlets’ reporting and may contain errors — always check the linked original."
}