Over the past decade, Paraguay has experienced robust economic growth averaging 5% annually, although with strong annual fluctuations mainly resulting from the impact of weather-related events on its agricultural sector (25% of GDP and 70% of total exports). Electric energy through the hydroelectric binationals Itaipu and Yacyreta, along with the soy and livestock production are the 2 leading economic activities. Despite competitiveness, infrastructure and institutional deficiencies, the country has high development potential in agricultural processing and components/parts manufacturing which led to the birth of a small ’maquila’ industry.
Notwithstanding Paraguay's remarkable economic growth, income and land distribution inequalities remain among the highest in the continent. The low quality of education and the country’s inefficient and incomplete social protection system are remaining challenges. Human rights challenges also persist – Paraguay needs to improve protection of vulnerable groups (children and adolescents, girls and women, indigenous peoples, persons with disabilities). Gender equality and endemic gender violence remain major concerns in Paraguay. Security is also threatened by violent crime and organised crime linked to drug trafficking, as well as persisting guerrilla insurgency.
EU collaboration with Paraguay will remain guided by the 2030 Agenda and the SDGs, as well as the Paris Agreement and the new European Consensus on development. The partnership for the period 2021-2027 is based on the National Development Plan (NDP) of Paraguay, which was adopted in 2014 and updated in 2020. The NDP is structured around four strategic areas:
- Reduction of poverty and social development
- Inclusive economic growth
- Insertion of Paraguay in the world
- Institutional strengthening
The NDP is broadly aligned to EU interests and priorities in Paraguay, though its impact on government sectoral policies is uneven.
The EU partnership will also contribute to the implementation of the Economic Recovery Plan, which was adopted in 2020, to face the economic and social consequences of the COVID crisis.
The choice of priority areas has been guided by the need, for the EU and its MSs, to have a transformational impact in Paraguay. In a situation of an ever-increasing number of priorities to face the consequences of COVID-19 and limited resources, the need to focus on a limited number of domains and to ensure an optimal division of labour has also been taken into account.
The two priority areas for the EU partnership with Paraguay for the period 2021-27 are:
Green and Resilient Economy
We support Paraguay in making its development more sustainable and its economy resource-efficient and more competitive. Along with enhanced policy dialogue, this would also help implement the EU-Mercosur Association Agreement (should it be signed and enter into force), as well as the EU Farm to Fork Strategy. Actions will be focused on the following two sectors:
- Biodiversity preservation/restoration, fight against deforestation and sustainable forest management
- Sustainable production and support for sustainable value chains
Fight against Inequalities
We will pay particular attention to the digitalisation of systems and services within the following selected sectors:
- Inclusive education
- Creation of opportunities to support the implementation of Social Protection programmes
- Enhancement of gender equality and non-discrimination
The Multiannual Indicative Programme (MIP) for Paraguay for 2021-2024 amounts to €51 million.
Priority area: ‘’Green and Resilient Economy’’ contributes to sustainable development in Paraguay through actions that make the Paraguayan economy and society more resilient. EU support under this priority area will directly contribute to the implementation of affordable and clean energy, reduced inequalities, sustainable cities and communities, and responsible consumption and production.
Priority area 2: ‘’Fighting against inequalities’’ supports the reduction of inequalities and the creation of more opportunities, focusing on the vulnerable 40% of the population. It will also directly improve the quality of education, gender equality, decent work and economic growth, and partnerships. Further actions may also support the implementation of the EU Election Observation Mission recommendations.
Paraguay has a rather vibrant civil society as demonstrated by the proliferation of Civil Society Organisations (CSO) in recent years. However, they often lack the capacity to constructively dialogue with the government and to act as “policy actors”. The EU will help facilitate dialogue between “traditional” CSOs and business federations. In addition to mainstreamed engagement with civil society, targeted support is also foreseen. This support will help to promote an enabling environment for civil society in Paraguay, developing its capacities and reinforcing citizens’ participation in public debate and scrutiny of public policies.