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Paraguay Economy 1996

Overview:

Agriculture, including forestry, accounts for about 25% of GDP, employs about 45% of the labor force, and provides the bulk of exports, in which soybeans and cotton are the most important. Paraguay lacks substantial mineral or petroleum resources but possesses a large hydropower potential. In a major step to increase its economic activity in the region, Paraguay in March 1991 joined the Southern Cone Common Market (MERCOSUR), which includes Brazil, Argentina, and Uruguay. In 1992, the government, through an unorthodox approach, reduced external debt with both commercial and official creditors by purchasing a sizable amount of the delinquent commercial debt in the secondary market at a substantial discount. The government had paid 100% of remaining official debt arrears to the US, Germany, France, and Spain. All commercial debt arrears have been rescheduled. For the long run, the government must press forward with general, market-oriented economic reforms. Growth of 3.5% in 1993 was spurred by higher-than-expected agricultural output and rising international commodity prices. Inflation picked up steam in fourth quarter 1993 because of rises in public sector salaries and utility rates. GDP growth continued in 1994 at 3.5%. Although inflation declined a bit over 1993, increases in food prices, and crop and infrastructure damage from heavy rains at the end of the year, forced inflation to 18%, above the government's target of 15%. Paraguay reaffirmed its commitment to MERCOSUR on 1 January 1995 by implementing the organization's common external tariff.

National product:

GDP - purchasing power parity - $15.4 billion (1994 est.)

National product real growth rate:

3.5% (1994 est.)

National product per capita:

$2,950 (1994 est.)

Inflation rate (consumer prices):

18% (1994 est.)

Unemployment rate:

11.2% (1994 est.)

Budget:

revenues:

$1.2 billion

expenditures:

$1.4 billion, including capital expenditures of $487 million (1992 est.)

Exports:

$728 million (f.o.b., 1993 est.)

commodities:

cotton, soybeans, timber, vegetable oils, meat products, coffee, tung oil

partners:

EC 37%, Brazil 25%, Argentina 10%, Chile 6%, US 6%

Imports:

$1.38 billion (c.i.f., 1993 est.)

commodities:

capital goods, foodstuffs, consumer goods, raw materials, fuels

partners:

Brazil 30%, EC 20%, US 18%, Argentina 8%, Japan 7%

External debt:

$1.4 billion (yearend 1993 est.)

Industrial production:

growth rate 3.6% (1993 est.); accounts for 20% of GDP

Electricity:

capacity:

6,530,000 kW

production:

26.5 billion kWh (1992)

consumption per capita:

note:

much of the electricity produced in Paraguay is exported to Brazil and domestic consumption cannot be determined

Industries:

meat packing, oilseed crushing, milling, brewing, textiles, other light consumer goods, cement, construction

Agriculture:

accounts for 26% of GDP; cash crops - cotton, sugarcane, soybeans; other crops - corn, wheat, tobacco, cassava, fruits, vegetables; animal products - beef, pork, eggs, milk; surplus producer of timber; self-sufficient in most foods

Illicit drugs:

illicit producer of cannabis for the international drug trade; important transshipment point for Bolivian cocaine headed for the US and Europe

Economic aid:

recipient:

US commitments, including Ex-Im (FY70-89), $172 million; Western (non-US) countries, ODA and OOF bilateral commitments (1970-89), $1.1 billion

Currency:

1 guarani (G) = 100 centimos

Exchange rates:

guaranies (G) per US$ - 1,949.6 (January 1995), 1,911.5 (1994), 1,744.3 (1993), 1,500.3 (1992), 1,325.2 (1991), 1,229.8 (1990)

Fiscal year:

calendar year

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