Paraguay has experienced robust economic growth (5% per year) over the past decade, despite strong annual fluctuations mainly resulting from climate-related events. Overall, it has withstood well the effects of the international financial crisis due to continued strong international demand for agricultural commodities and its low exposure to the banking crisis. Public debt is low, and the fiscal and balance of payments position can be considered as stable. Inflation is under control.
According to the statistics published in 2014, extreme poverty nearly halved between 2011 and 2013 (from 18% to 10% of the population), confirming that social policies initiated by the government and supported by the EU, combining social services, employment creation and conditional cash transfers, have had a major impact in the reduction of poverty. Notwithstanding Paraguay's economic growth performance, income inequalities remain among the highest in the continent. Therefore, the main development challenges for Paraguay remain its human capital development, the improvement of its business climate, the development of a stable and socially inclusive Paraguay and the strengthening of democratic institutions, among others by implementing the recommendations of the 2013 EU’s Election Observation Mission.
EU cooperation 2014-2020
Under the financial period 2014-2020, €168 million are available for addressing the above mentioned development challenges. Based on the analysis of development needs and national priorities in Paraguay, the Government and the EU jointly decided to focus cooperation on education, private sector development, social protection and democracy, participation and institutional strengthening as main priority sectors.
EU cooperation 2008-2013
An indicative allocation of €130 million was earmarked for Paraguay in the period 2007–2013 under the EU for Development Cooperation Instrument (DCI). Key operations covered education, social protection and economic development.
The results that Paraguay obtained in the field of social protection are outstanding. Extreme poverty in Paraguay was reduced from 18 % in 2011 to 10.5 % in 2014. The EU has contributed to achieve this result through its support to the public policy on social development which specifically targeted the poorest with a combination of social services, employment creation and conditional cash transfers.
The EU is one of the biggest donors in education. The EU has been supporting the education sector in Paraguay since 2009. Since then, a significant evolution in the main strategic axes governing the National Education Plan can be noticed. Among them, worth mentioning the consolidation of free education covering 100% of the official institutions, the distribution of school supply kits to all students attending public and subsidized private educational institutions , the expansion of education to children from 3-5 years age benefiting more than 3.800 students and the recruitment of teachers through public competitions.
The EU will continue working jointly with Paraguay in the implementation of the National Education Plan 2024. As part of this effort, a new EC financial contribution of € 46 million aiming at increasing both the access to, and the quality of, primary and secondary education has been recently approved.
The EU also promotes, through thematic programmes, the contribution of civil society and local authorities in Paraguay in areas such as human rights and democracy, human and social development or environment and climate change. Currently the EU is supporting with €1.6 million 5 projects with civil society organisations.
Furthermore, through the Latin America regional programme AL-INVEST, the EU is supporting 3 projects with business associations to reinforce, and increase the competitiveness, of SMEs in Paraguay, for a total amount of more than 1.1M€. Finally, through the Erasmus+ programme the EU is supporting the participation of a total of 16 Paraguayan universities in mobility projects with European universities and in capacity development projects with both European and Latin American universities.