Paraguay: Efficiency and equity of Public Policies

Abstract

The significant expansion of the Paraguayan economy implies sustained high GDP growth over the long term, contingent upon a context of predominantly competitive markets and a State that effectively fulfills its role as promoter of the common good and guardian of national interests. This article examines three interrelated pillars of economic policy. First, it addresses public expenditure, with a focus on evaluating and enhancing the efficiency of spending, transparency, oversight mechanisms, and accountability frameworks. Second, it analyzes the financial sustainability of the social security system and proposes reforms to both the public and private pension schemes. Third, it investigates tax revenues, assessing their performance and proposing measures to increase fiscal collections and improve tax equity. The methodology is based on the analysis of primary data spanning the last four decades at the national level, and, in selected cases, at the regional level. The article concludes that the State must enhance the efficiency of public spending, urgently pursue comprehensive reforms of both public and private social security systems, and implement fiscal measures to increase revenue collection in a more equitable and efficient manner. These actions are essential to addressing the country’s low tax burden and ensuring adequate financing for the development of Paraguay’s human and physical capital.