Paraguay must diversify its economy, says former Minister of Finance

RIO DE JANEIRO, BRAZIL – Paraguayan economist and former Minister of Finance, Lea Giménez, spoke about the country’s economic challenges in the face of historical inflation. She mentioned that it is crucial to look for other supports to overcome shocks through the diversification of Paraguay’s economy.

The country’s economic reality is observed with many complications due to the constant blows received in the last months because of the drought and the world political conditions. Lea Giménez spoke to Unicanal and referred that it is time to make important decisions about the country we want in the future, focused mainly on the economic development maintained during the last 20 years.

In this sense, she pointed out that the focus should be on human capital in addition to looking at infrastructure issues. Although it will not generate positive results quickly, it will help development in the future. As for the strategies that should be developed immediately, she explained that we should bet on other areas so that when there are shocks in the economy in one sector, we can overcome them through other supports.

“We have to look at other areas where we can diversify our economy so that when we are hit by a drought or have an exogenous shock, we have another backup, not just one or two backups,” Giménez said. He mentioned that analysts are currently talking about a retraction in the economy that mainly affects micro-economies.

The former minister mentioned that Paraguay has excellent potential, but it needs to focus on a strategic vision that helps mobilize the economy with its resources. In this context, she said that it is time to open our eyes to focus on the need to diversify the energy matrix.

“We can start focusing on green hydrogen, which is in high demand in other parts of the world. It can be an input for the manufacture of fertilizers; it can help us feed a fleet of electric transport in our country,” Gimenez said while mentioning that this area could help the country make that leap towards real growth.

Although there is great interest in investing in Paraguay, some issues hinder these possibilities that must be addressed immediately. According to Gimenez, Paraguay must improve its letter of presentation to be serious so that these investments can materialize and not end up cooling off as has been happening.

She explained that the country needs competent leadership capable of showing a strategic vision towards where they should focus on reaching economic development through growth in other areas in which there is an incredible potential, which has not been able to be exploited. “We have to present ourselves seriously so that investments arrive at the measure we need,” she emphasized.

The economist assured that a challenging year is ahead due to the lack of that leadership that can foresee adverse situations that the country may go through. On this point, she spoke about the indebtedness recorded in 2020 and indicated that it was done with the understanding that it was necessary to face a challenge.

“That was done with an understanding that it was necessary to be able to face something that was coming our way, and I believe that in that sense there was consensus, but at that time, commitments were made in reforms that had to occur in different issues. None of that was approved; all of that is still sleeping in Congress,” she expressed.

Regarding the increase in fuel price and the possibility of looking at electric mobility as a solution, she explained that they do not happen immediately and assured it must be part of a national strategy through subsidies applied in other countries to motivate its use. She indicated that it is time to adjust in terms of expenses at the level of families to foresee more complicated scenarios.

“To have savings, even if one earns two million guaraníes, it is always possible to save a little bit, and I think that is key today. To cut back on some purchases that may not make sense now. It is better to save the money today, save a little bit of that cash and prepare ourselves for that in the short term”, said the former Minister of Finance.

With information from La Nación