ASUNCION – Paraguay’s finance minister defended on Wednesday federal government spending in 2016, a year that has seen increased investment in infrastructure and a reduction in spending on salaries.
Santiago Peña made his remarks during the presentation of the Finance Ministry’s year-end report for 2016.
He said 39 percent of total public spending had been allocated for infrastructure this year, while 8 percent went to salaries, down sharply from previous years.
“We’ve improved the public spending structure. Public investment has risen, and for the first time in its history Paraguay’s wage bill has declined,” Peña said.
He added that strict containment of salary spending was not a popular measure but would bring long-term benefits in the form of new highways and overpasses, noting that only 17 percent of Paraguay’s road network is currently paved.
Infrastructure investment in 2016 was financed with loans from regional organizations such CAF – Development Bank of Latin America as well as sovereign bond placements, according to Peña.
But the Paraguayan Senate, citing concerns about an increase in public debt, reduced by half the Finance Ministry’s plans for $558 million in bond financing for 2017.
“The outcome of the budget discussion in Congress was not what we had hoped, but we have to continue to build consensus,” Peña said.
He insisted that Paraguay’s public debt load of around 20 percent of gross domestic product (GDP) was manageable, while the International Monetary Fund says a debt-to-GDP ratio of between 30-45 percent was a sustainable level for the South American nation.