Paraguay plans to issue green bonds to diversify its financing, as recently highlighted by Finance Minister Carlos Fernández Valdovinos.
The country is in talks with the Inter-American Development Bank (IDB). This collaboration could lead to Paraguay’s first green bonds on the international market next year.
The global demand for eco-friendly investments is rising. So, this is an ideal time for Paraguay to act.
The goal is simple: broaden funding avenues and raise about $1 billion through bonds next year.
This plan aligns with President Santiago Peña’s vision of prioritizing sustainable investment.
Additionally, Paraguay has already made strides in sustainability. It’s the first Latin American country to adopt the UN’s Sustainable Development Goals.
The government also seeks other international funding options, like Saudi Arabia to diversify even more.
However, global funding isn’t the only focus. With international financing costs going up, Paraguay is looking inward.
The country is considering issuing green bonds in its own currency. In fact, foreign investors have already bought local currency bonds during an internal sale in July.
Lastly, commercial banks have signaled that domestic green bonds could reach up to $200 million.
This shows that Paraguay is well-positioned to become a key player in Latin America’s growing green bond market.
Background
Paraguay’s interest in green bonds isn’t isolated; it reflects a broader trend in Latin America.
Countries like Chile and Mexico have successfully entered this market before. Therefore, Paraguay’s move is seen as part of a regional push towards more responsible financing.
Historically, Paraguay has heavily relied on agriculture and hydropower for its economy. However, a shift towards more sustainable practices has been evident in recent years.