Paraguay infra investments cool off as COVID bites

Paraguay’s public investments in infrastructure are falling behind 2020 levels as the country is dealing with a shortage of resources caused by the COVID-19 pandemic and authorities are struggling with payments to contractors.

By the end of June, the public works ministry (MOPC) had spent 1.6tn guaraníes (US$236mn) on works during 2021, 32% less than in the first half of 2020, official numbers show.

The country had originally looked to public works to offset the economic effects of the pandemic, but at one point the finance ministry asked MOPC to not launch new tenders for projects funded by the treasury, citing budget constraints caused by the health crisis, although funds from multilaterals were allowed to continue.

COVID-19 cases in Paraguay remained behind most of Latin America until late 2020, but earlier this year the government was targeted by protests over the lack of medicines and vaccines.

As of July 10, Paraguay’s health ministry reported that 966,870 residents had received at least one vaccine dose against the disease, or 13% of the population. Meanwhile, the country has registered 436,624 cases and 13,867 fatalities.

The scramble to deal with the pandemic led to the delay of the tender for a third bridge on the border with Brazil, as Paraguayan authorities redirected US$30mn previously embarked for the US$82mn project to funding for the health emergency.

DEBTS PILING UP 

By May, MOPC’s accumulated debts with contractors since last year are over US$200mn, according to the country’s road construction business association Cavialpa.

The organization’s head Paul Sarubbi told Radio La Unión that publicly funded projects were the ones that saw the biggest payment delays.

While Sarubbi admitted that the health emergency takes central stage, he called to not frame it as a choice between health and the economy, and warned that the fall in public investment would greatly affect companies that used loans to purchase equipment as the government increased MOPC’s budget in recent years.

In 2020, the ministry surpassed its US$1bn investment goal.

WORKS IN PROGRESS

Despite the setbacks in publicly funded projects, some large infrastructure initiatives have managed to go ahead this year. So far MOPC has awarded the contracts for the: 

Remanso-Puerto Falcón border pass corridor (US$23mn, financed by Fonplata)

New Coronel Oviedo hospital (US$22mn)

Eastern metropolitan corridor (US$45mn)

Ruta de la Leche (US$100mn, financed by IDB)

At the same time, tenders are underway for the:

Bioceanic bridge (US$82mn)

Encarnación hospital (US$43mn, financed by IDB)