IDB approves $200 million to support Paraguay’s state transformation process

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ASUNCION, Paraguay – Paraguay will continue its process of transforming the State and improving public sector effectiveness with the State Transformation Support Program, a $200 million loan approved by the Inter-American Development Bank (IDB).

This is the first of two consecutive operations technically related to one another but independently financed under the Programmatic policy-based loan (PBP) modality.

The operation is expected to contribute to a greater effectiveness within the public sector by increasing management efficiency and efficacy, as well as improving its integrity and transparency.

To this end, the State Transformation Support Program will back reforms in key management systems such as public procurement and human resources, which will directly impact the quality of 65 percent of public spending; and in enabling factors that are critical to public management such as national statistics, digitalization, and public employee integrity.

The program also includes reforms to strengthen governance in public institutions like the Development Finance Agency, which play a strategic role in sustained economic growth.

Policy measures in the program include the introduction of gender equality as an overarching principle of civil service, promotion of women’s access to decision-making positions, and rules and mechanisms to guarantee equal participation in recruitment and selection processes.

The program will benefit Paraguay’s population as a whole, especially taxpayers, citizens interested in working in the public sector, people with an interest in national statistics, and public service users. Businesses, particularly micro, small, and medium-sized enterprises (MSMEs), and public institutions will also benefit from the initiative.

This operation is in line with the IDB’s Vision 2025 – Reinvesting in the Americas: A Decade of Opportunities, to achieve recovery and inclusive growth in Latin America and the Caribbean in the areas of institutional governance, small and medium-sized enterprises, digital economy, gender, and climate change.

The IDB loan of $200 million has a 20-year repayment term, a 5.5-year grace period, and an interest rate based on SOFR.

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