Gimenez's generation finds a new fiscal religion
Paraguay’s bright young things are trying to transform the country’s economy. A dogged commitment to macroeconomic stability means that a commodity slump and recessions in its two big neighbours have not derailed growth.
Paraguay’s finance minister Lea Gimenez
Paraguay’s economy is expected to expand by 4% in 2017, according to Fitch Ratings – the same growth rate that was achieved in 2016 despite the hangover from a 40% drop in commodity prices and sharp downturns in both Brazil and Argentina. For Lea Gimenez, Paraguay’s finance minister since June last year and the first woman to hold the post, that outcome underscores the growing resilience of the Paraguayan economy.
“This in the past would have meant the total collapse of our economy,” says Gimenez, who, at just 36 years old, is one of a number of bright young Paraguayan politicians seeking to transform and modernize the country. “Things are very different now. Since 2003 we have been building on our macro stability; today it is like our religion. Back then we were close to a selective default and, at that point, we started to rethink our model and to be more serious about maintaining stability, so we started to fix things and implement reforms because we didn’t want to go back to how things were before.”
One key reform, introduced in 2013, is the fiscal responsibility law that limits the fiscal deficit to 1.5%