Paraguay’s public works ministry faces major budget cut

Paraguay’s budget for 2022 includes a 35% cut in funding for the public works ministry (MOPC) as the government looks to reduce its fiscal deficit. 

The proposal for next year would see MOPC’s 2021 funds of 9.1tn guaraníes (US$1.3bn) lowered to around 6tn, MOPC head Arnoldo Wiens told a congressional budget committee. 

In particular, the 2022 budget would reduce the amount allocated for physical infrastructure investments from 86% of the total to 76%.

The government aims to cut the deficit from an estimated 4% of GDP this year to 1.5% next year, to bring it in line with the country’s fiscal stability law.

To avoid halting projects that are already in the execution stage, Wiens said he has requested changing the deficit target to 3% in order to add US$408mn (1% of GDP) to MOPC’s 2022 budget.

The additional funds could come from loans from multilaterals, a person with knowledge of the matter, who spoke on the condition anonymity, told BNamericas.

MOPC has been unable to launch tenders for new projects funded by the treasury since August 2020, following a request from the finance ministry to prioritize health-related investments during the COVID-19 pandemic, Wiens said, adding that tenders for projects funded by multilaterals had not been affected by the decision.

This situation “creates a crisis, especially for small and medium-sized construction firms, who many times don’t participate in tenders with multilaterals and many of them are now being left without projects,” he said. 

In addition to its US$1.5bn PPP and turnkey infrastructure agenda, the ministry is now planning tenders for 18 highway stretches comprising 3,148km. Eight are expected to be awarded in 2022-23, two in 2024-25, and the remainder in 2026-27, said Wiens.

The plan has to be reviewed by the finance ministry and then obtain congressional approval, he added.