Paraguay targets investment boost: FinMin
September 27, 2013
Paraguays new government hopes to secure foreign capital through a radical economic overhaul, its finance minister says
||Paraguay's new finance minister Germán Rojas
(left) takes over from former finance minister
Paraguay's finance minister Germán Rojas has laid out the government's ambitious plans to revamp the country's agriculture-dependent economy and secure fresh foreign capital, in one of his first interviews since taking office last month.
The country, which debuted in the international bond markets in January, intends to "position itself as an investment destination", Rojas told LatinFinance.
Paraguay is set to be Latin America's fastest-growing economy this year, with GDP projected to increase 13% from 2012. That follows a contraction of 1.2% last year.
The country's economic performance is deeply dependent on agricultural exports, driving sharp swings in growth. The new government, which took power in August, hopes to change that.
"The president has the firm intention to generate a greater diversification of the economy," Rojas said. "The required business environment is being set up to attract industrial investment."
Horacio Cartes, Paraguay's new president, began an investment drive as soon as he was inaugurated, hosting a breakfast with 350 business leaders to outline his vision for the country.
Paraguay sold its first international bond in January this year, grabbing an opportunity for rare credits to tap dollar debt markets. The bond "put Paraguay on the financial map," Roland Holst, acting governor of the central bank, told LatinFinance.
The sovereign hopes to repeat the feat in 2014, although Holst says the execution plan will have to adapt according to conditions, as rates rise amid the US Federal Reserve's expected wind-down of its quantitative easing program.
Proceeds from a second bond issue will finance Paraguay's infrastructure improvement plan.
Developing a sovereign curve will also help local companies tap dollar bond markets by providing a pricing benchmark.
Already a handful of companies have come to market. Telefónica Celular del Paraguay (Tigo), the country's biggest mobile operator, priced a $300 million 2022 non-call five year bond in its debut transaction in December. It was the first non-bank international issuer from Paraguay, and drew $4 billion in orders, including from US high-yield accounts and dedicated emerging market buyers.
That deal also followed Banco Continental Paraguay's $200 million bond in June last year and BBVA Paraguay's $100 million deal in 2011. LF