Government at a Glance Latin America 2024 - Country Notes: Paraguay

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Trust and satisfaction with public services

Trust in public institutions and satisfaction with public services are important outcomes of the quality of public governance. They reflect people’s perceptions of government competence in designing and delivering policies and services, as well as expectations about the behaviour of public institutions and public officials. Satisfaction with public services and trust in public institutions – while not necessary outcomes of democratic governance – can enhance effective governance by fostering participation in public life, compliance with policies, and social cohesion.

A large majority of Paraguayans are satisfied with education and more than half with the health system. Paraguayans are most satisfied with the education system, with 74% of the population being satisfied in 2022, higher than both the LAC (66%) and OECD (67%) averages. The healthcare sector has a satisfaction rate of 53%, aligning with the LAC average but falling 15 percentage points (p.p.) below the OECD (68%). Satisfaction with the judiciary system is at 36%, in line with the LAC average (38%).

Good governance for inclusiveness and sustainability

In an age of multiple crises, countries in Latin America and the Caribbean need to pursue good governance practices that foster inclusiveness and sustainability, crucial for promoting prosperity and democratic resilience. Key actions include building on democratic strengths, such as enhancing stakeholder engagement in decision making and promoting representation and inclusion in public workforce. Additionally, efforts should focus on reinforcing key competences to deliver inclusive and sustainable growth, including budgeting and public procurement approaches that support the green transition. Safeguarding against threats to democratic values demands that effective public integrity rules and robust regulation against undue influence be maintained.

Budget management processes, such as gender budgeting, can also help promote measures to close gender gaps. The OECD Gender Budgeting Index measures how countries perform on five dimensions of gender budgeting mechanisms: institutional and strategic framework to assess the gender impact of budgetary and fiscal policies; methods and tools used to implement gender budgeting; mechanisms to enhance transparency and accountability; the enabling environment for the effective and consistent implementation of the gender budgeting framework; and the impact of gender budgeting on policy development and allocation decisions. Of the 13 surveyed LAC countries, 10 practice gender budgeting (77%), compared to 61% of OECD countries.

Paraguay performs below the LAC average on the Gender Budgeting Index. It scores 0.31, on a scale of 0 to 1, lower than the LAC (0.47) and OECD (0.49) averages. The country's highest score is in institutional and strategic framework (0.1). There is room for improvement in all other dimensions, particularly on impact, where is scores 0.03.

Public procurement – the purchase of goods, services and works by governments and state-owned enterprises – averaged 17.4% of total government expenditure in Latin America and the Caribbean countries in 2021. Public administrations are increasingly adopting public procurement as a strategic policy instrument to promote social objectives, for example to strengthen sustainability and environmental responsibility, by favouring green procurement and responsible business conduct, and inclusiveness, by incentivising the participation of different individuals and business groups as suppliers.

Paraguay has developed a strategy at the central level of government to promote green public procurement, responsible business conduct, and pursue the participation of SMEs in public procurement processes. In comparison, 14 LAC countries have a central government strategy to promote the participation of SMEs in public procurement, 9 countries for green public procurement, and 7 for responsible business conduct.

Meaningful engagement with stakeholders in decision making helps to improve the design and public acceptance of public policies and services. The OECD's Regulatory Policy and Governance Index (iREG) assesses stakeholder engagement in the development of subordinate regulations (those approved by the head of government, ministries or the cabinet). This index measures countries’ performance in systematically involving stakeholders in public decision making, the use of tools, the transparency of their consultations, and their oversight and quality control. Between 2019 and 2022, 8 out of 11 surveyed LAC countries (73%) improved their iREG score on stakeholder engagement.

Paraguay performs below the LAC average on the iREG index for stakeholder engagement for developing subordinate regulations. Paraguay's total score of 0.78, on a 0-4 scale, is below the LAC (1.85) and OECD (2.14) averages. Its highest score is in the methodology dimension (0.4 out of a maximum score of 1), but there is room for improvement in all dimensions, including on the stakeholder participation systematic adoption (0.22), transparency (0.16), and oversight and quality control (0).

A diverse public sector workforce is essential for promoting representation and inclusion of underrepresented and vulnerable groups. It strengthens government performance by driving innovation and contributing to tailored public services to meet the community's needs. Governments can use policies and targets to recruit and retain under-represented groups in the workforce

Paraguay has specific targets in place for the inclusion of people with disabilities and indigenous people in the public workforce at the central level. Paraguay lacks policies and targets for inclusion of young professionals. In comparison, among the surveyed LAC countries, 10 out of 15 have targets for people with disabilities, and 4 countries have targets for young professionals and for indigenous people.

Figure 5. Policies and targets to improve the representation of specific groups in the central/federal administration, 2022

Use and management of public resources 

To make meaningful progress toward inclusive and sustainable growth, governments need to manage their existing resources strategically. From a fiscal perspective, this entails balancing how much the government spends and collects. From a human resource perspective, it means strengthening the capacity and skills of public employees and creating a public workforce and elected public officials who represent all the people they serve.

Public finances in the LAC region show modest positive signs, after a stark deterioration in 2020. This downturn was due to emergency measures taken to fight the COVID-19 pandemic, along with measures to support businesses and people to manage its impacts. Fiscal balances - the difference between a government’s revenues and its expenditures in a year - had broadly recovered to pre-COVID levels by 2022 across Latin America and the Caribbean. However, economic recovery remains fragile.

In 2022, Paraguay had a fiscal deficit of 3.8% of GDP, slightly larger than the average across LAC countries (3.4%), and unchanged in comparison with 2019. Government revenue represented 19.9% of Paraguay's GDP in 2022, compared to 31.5% on average in LAC countries and 39.7% in OECD countries. This ratio of revenue relative to GDP has slightly increased from 19.2% in 2019.

Government debt can be used to finance both current expenditure and investments but comes at a cost in the form of interest payments. Debt as a share of GDP increased during the COVID-19 pandemic in the LAC region due to increased expenditure and loss of tax revenues, and in 2022 still remained 2 p.p. above its 2019 level.

In 2022, Paraguay’s government debt amounted to 40.8% of its GDP, below the LAC average of 66.3%. Its debt level has increased from 25.8% of GDP in 2019.

Public employees are at the forefront of policy design and formulation and the delivery of public services. The share of public employment varies significantly across the LAC region, ranging from under 5% of total employment to over 20%.

In 2022, public employment in Paraguay amounted to 10% of total employment, below the LAC average of 12%, and lower than the OECD average of 21%. Public employment in Paraguay has remained almost steady between 2018 and 2022.

Figure notes

Data on public finance and economics are from the IMF World Economic Outlook (WEO) database (October 2023), which is based on the Government Finance Statistics Manual (GFSM) and were extracted on 3 November 2023. For the OECD averages, data were based on the System of National Accounts (SNA) and were extracted from the Government at a Glance online database representing the last available update: 5 January 2024.

Fiscal balance, also referred to as net lending (+) or net borrowing (-) of general government, is calculated as total government revenues minus total government expenditures.

Data on public employment are derived from the International Labour Organization (ILO) ILOSTAT database and were extracted on 17 February 2023. Data are based on the Labour Force Survey. Public sector employment covers employment in the government sector plus employment in publicly owned resident enterprises and companies.

LAC and OECD averages refer to the unweighted average with the exception of public finance indicators.

For more information see www.oecd.org/publication/government-at-a-glance-lac/2024/