iscal Lopez, Asuncion
mailing address:
C. P. 402, Asuncion, or APO AA 34036-0001
telephone:
[595] (21) 213-715
FAX:
[595] (21) 213-728
Flag:
three equal, horizontal bands of red (top), white, and blue with an emblem
centered in the white band; unusual flag in that the emblem is different on
each side; the obverse (hoist side at the left) bears the national coat of
arms (a yellow five-pointed star within a green wreath capped by the words
REPUBLICA DEL PARAGUAY, all within two circles); the reverse (hoist side at
the right) bears the seal of the treasury (a yellow lion below a red Cap of
Liberty and the words Paz y Justicia (Peace and Justice) capped by the words
REPUBLICA DEL PARAGUAY, all within two circles)

*Paraguay, Economy

Overview:
Agriculture, including forestry, accounts for about 25% of GDP, employs
about 45% of the labor force, and provides the bulk of exports. Paraguay
lacks substantial mineral or petroleum resources but does have a large
hydropower potential. Since 1981 economic performance has declined compared
with the boom period of 1976-81, when real GDP grew at an average annual
rate of nearly 11%. During the period 1982-86 real GDP fell in three of five
years, inflation jumped to an annual rate of 32%, and foreign debt rose.
Factors responsible for the erratic behavior of the economy were the
completion of the Itaipu hydroelectric dam, bad weather for crops, and weak
international commodity prices for agricultural exports. In 1987 the economy
experienced a minor recovery because of improved weather conditions and
stronger international prices for key agricultural exports. The recovery
continued through 1990, on the strength of bumper crops in 1988-89. In a
major step to increase its economic activity in the region, Paraguay in
March 1991 joined the Southern Cone Common Market (MERCOSUR), which includes
Brazil, Argentina, and Uruguay. In 1992, the government, through an
unorthodox approach, reduced external debt with both commercial and official
creditors by purchasing a sizable amount of the delinquent commercial debt
in the secondary market at a substantial discount. The government had paid
100% of remaining official debt arrears to the US, Germany, France, and
Spain. All commercial debt arrears have been rescheduled. For the long run,
the government must press forward with general, market-oriented economic
reforms.
Nationa