The IDB proposes complementing available fiscal space with multilateral cooperation, concessions, public-private partnerships, guarantee instruments, and capital market financing. Private participation can provide capital, financing, innovation and management capacity while distributing certain construction risks and cost overruns, provided contracts clearly establish each party’s obligations. However, incorporating private capital does not eliminate the need to evaluate total project costs or potential effects on public finances. PPPs and concessions require analysis of long-term commitments, granted guarantees, and risks that could ultimately transfer to the state.
Chaverri-Suárez identified challenges related to long preparation times and the need for technically mature projects in Paraguay’s PPP development. Necessary conditions include balanced contracts, predictable rules, adequate risk distribution, and public capacity to structure, tender and supervise long-term commitments. Project preparation is determinant, requiring technical studies, viable financial structure and clear responsibility allocation before advancing to tender. The IDB also proposes expanding PPP use beyond highways, adapting participation mechanisms to each sector’s characteristics rather than replicating a single contractual model.
The Paraguayan Chamber of Road Builders estimates the country’s infrastructure deficit at USD 30 billion, while the IDB calculates Paraguay will require approximately USD 10 billion by 2030 to modernize highways, airports and urban transport. Current infrastructure investment reaches less than half of required levels. The fiscal deficit is projected to close 2026 at approximately 3.2% of GDP, rising to 3.9% in 2027 before returning to the legal ceiling of 1.5% in 2028, according to Ministry of Economy and Finance projections.
BID Invest has conducted ten emissions in guaraníes since 2018 totaling G. 1.2 trillion, equivalent to approximately USD 200 million, channeling domestic savings toward productive investments. The institution also participated as investor in a guaraní-denominated bond equivalent to USD 50 million with ten-year maturity destined for digital infrastructure expansion. The IDB approved USD 200 million financing for the Bioceanic Corridor, covering 102.5 kilometers of route PY15 section II, benefiting over 7,000 primary producers and improving connectivity for 99 population centers including 23 indigenous communities.
This article was curated and published as part of our South American energy market coverage.
