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.
The main objectives of the current Multi-annual Indicative Programme (MIP) 2014-2020 cover 4 sectors:
- Education: Contribute to guarantee the access, the improvement of quality, the efficiency and equity of Paraguayan education as a public good for all children and youth.
- Private sector development: Support sustainable and inclusive growth through an improved investment climate and enhanced competitiveness.
- Social protection: Contribute to the reduction of extreme poverty by strengthening the social protection system, enhancing the quality of and access to public services.
- Democracy, participation and institutional strengthening: Support democracy, credible elections in line with the national legislation and international conventions subscribed by the country, rule of law and the functioning of public institutions.
Paraguay was allocated €168 million under the current Development Cooperation Instrument (DCI) programming period (2014-2020).
Paraguay benefits from the Regional Cooperation Programmes for Latin America (LA). With €805 million foreseen for the Multi-annual Indicative programme (MIP) 2014-2020, the amount has increased substantially compared to the preceding period. Priorities of the MIP are the security-development nexus; good governance, accountability and social equity; inclusive and sustainable growth; environmental sustainability and climate change; and higher education via Erasmus+ 2014-2020. In addition, funds from thematic programmes are made available for LA regional cooperation, currently financing a Latin American Investment Facility (LAIF) climate change window and an EU-ECLAC project on migration.
Particularly relevant is Paraguay’s participation in AL-INVEST (for the internationalisation of SMEs through several workshops), EUROsociAL+ (on social policies, employment, education, public financial management and Justice), EUROCLIMA+ (on climate governance, renewable energy and energy efficiency, and water management components). On social protection, EUROsociAL+ has a key role in initiating actions to lay the basis for a possible budget support programme. On security issues, Paraguay benefits from EL PAcCTO but has also hosted some of COPOLAD II's activities. It should be covered by the future EUROFRONT programme.
LAIF supports one project in Paraguay: ’Yacyretá transmission line’ (global amount: €201 million; EU: €10 million).
Paraguay also participated in the bilateral cooperation EU –Mercosur. The total portfolio for the period 2007-2013 was €47.3 million in 3 priority sectors: support for the development of biotechnologies; deepening of MERCOSUR; and strengthening of civil society participation and knowledge of the regional integration process. Projects (closed): Support to the mobility programme of Mercosur on higher education (€3 million); Mercosur audiovisual (€1.5 million); Support to Mercosur's education sector (€6.8 million); Biotech II (€2 million); Mercosur information society (€7 million); ECONORMAS Mercosur (€12 million).
Paraguay benefits from the Erasmus+ Programme (2014–2020) targeting the Higher Education institutions and systems.
Paraguay participates in the Cocaine Route Programme and more specifically in the following projects (on-going): Prevention of the Diversion of Drugs Precursors in the LAC region (PRELAC); GAFILAT-EU.
In 2018-19, Paraguay received support on migration management, consular assistance and protection and return and reintegration through the EU-funded programme MIEUX (MIgration EU eXpertise).