Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

COUNTRY PROFILE: PARAGUAY 

October 2005 

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COUNTRY 

Formal Name: Republic of Paraguay (República del Paraguay). 

Short Form: Paraguay. 

Term for Citizen(s): Paraguayan(s). 

Capital: Asunción. 

Major Cities: Asunción (508,000 inhabitants), Ciudad del Este (261,000), San Lorenzo 

(228,000), Luque (210,000), Capiatá (199,000), Lambaré (126,000), and Fernando de la Mora 

(120,000) rank as Paraguay’s most populous cities⎯the country’s only cities with more than 

100,000 inhabitants. 

Independence: Paraguay led the South American charge for independence, securing its freedom

from Spain on May 17, 1811, after several days of fighting. Independence day is observed on 

May 15. 

Public Holidays: New Year’s Day (January 1); Day of Heroes (March 1); Maundy Thursday, 

Good Friday, and Easter (variable dates in March or April); Labor Day (May 1); Independence 

Day (May 15); Chaco’s Peace (June 12); Founding of Asunción (August 15); Battle of Boquerón 

(September 29); Virgin of Caacupé (December 8); and Christmas Day (December 25). 

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Flag: The Paraguayan flag has three equal, horizontal bands of red (top), 

white, and blue and is one of the few national flags with different emblems 

on each side. The national coat of arms is centered in the middle white band 

on the hoist side. The reverse side bears the seal of the treasury. 

HISTORICAL BACKGROUND 

Pre-Columbian Paraguay and Spanish Imperialism: Long before Spanish conquistadors 

discovered Paraguay for King Charles V in 1524, semi-nomadic Chaco Indian tribes populated 

Paraguay’s rugged landscape. Although few relics or physical landmarks remain from these 

tribes, the fact that nearly 90 percent of Paraguayans still understand the indigenous Guaraní 

language is testament to Paraguay’s Indian lineage. The Spanish conquistadors arrived in 1524 

and founded Asunción in 1537. Paraguay’s colonial experience differed from that of neighboring 

countries, such as Bolivia and Argentina, because it did not have what the Spanish were 

searching for⎯gold or other large mineral deposits. Because of its lack of mineral wealth and its 

remoteness, Paraguay remained underpopulated and economically underdeveloped. Early 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

governor Domingo Martínez de Irala took an Indian wife and a series of Indian concubines and 

encouraged other male settlers to do likewise. Intermarriage fused Indian culture with that of the 

Europeans, creating the mestizo class that dominates Paraguay today. From the beginning, 

however, Indians retained their Guaraní language, even as Spanish influence was accepted, and 

embraced, in other aspects of society. 

Although European fortune seekers headed elsewhere in South America, the Jesuits descended 

on Paraguay and, over a period of generations, transformed the lives of the Indians. By the 

beginning of the seventeenth century, about 100,000 of the once polytheistic, semi-nomadic 

Indians had converted to Christianity and settled the land surrounding the missions. This 

theocratic society endured until 1767, when Spanish authorities expelled the Jesuits from

Paraguay, fearing that the massive wealth and land accumulated by the Jesuits had made the 

mission communes (reducciones) an “empire within an empire.” In the vacuum left by the Jesuit 

ouster, the Indians experienced for the first time direct contact with Spanish officials. Ultimately, 

however, the administrative and military tactics of imperial control proved far less successful and 

palatable than those of the Jesuits. Tensions between the natives and the Europeans grew steadily 

during the last years of the eighteenth century. 

Independence and Dictatorship: Napoleon’s invasion of the Iberian Peninsula in 1807 severely 

undermined the legitimacy of the already-faltering Spanish empire. In 1811 Paraguay, despite its 

small population and dearth of economic resources, became the first Spanish territory in South 

America to achieve independence. Revolutionary fighting lasted only a few days, and 

independence was declared on May 17, 1811. Having thrown off the Buenos Aires-based 

Spanish authorities, Paraguay was left with the prospect of building a nation. 

Dictatorship followed independence in Paraguay. Dr. José Gaspar Rodríguez de Francia, known 

as “El Supremo,” seized control of the newly independent country in 1814 and closed it off to the 

rest of the world. Francia outlawed all things Spanish⎯including use of the Spanish language. 

Although he trampled on human rights and left little room in his government for democratic 

debate, Francia succeeded in stabilizing Paraguay and warded off the annexation attempts of 

Argentina. He distributed land to poor farmers and used protectionist economic policies to 

develop native industries in shipbuilding and textiles. Under his watch, agricultural production 

boomed. At the time of his death in 1840, Paraguay enjoyed civil and economic stability, almost 

entirely attributable to Francia. As a negative legacy, however, Francia left behind a precedent of 

dictatorship that Paraguay would long struggle to break. 

After Francia’s death, a succession of dictators controlled Paraguay. Carlos Antonio López 

(president 1842−62) reopened Paraguay to international commerce, extended the country’s 

railroad system, and abolished slavery. As with Francia, however, López’s actions did not all 

have positive effects on the fledgling nation. López established Paraguay’s modern army, which 

would have a corrosive impact on Paraguayan politics for years in the future. López was 

succeeded by his son, Francisco Solano López (1862−70), who took the title “president for life.” 

The War of the Triple Alliance: In the midst of Francisco Solano López’s rule, Paraguay 

suffered a devastating defeat in the War of the Triple Alliance (1865−70). Believing that

defending Uruguay’s sovereignty was paramount in protecting its own interests, Paraguay 

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intervened when Brazil invaded Uruguay, but Argentina, a long-time rival of Brazil, surprisingly 

refused to partner with Paraguay against Brazil. Instead, Argentina denied Paraguay passage 

through its territory to attack Brazil and ultimately joined with Brazil and Uruguay to form the 

“triple alliance” against Paraguay. Paraguay lacked the resources to carry out a war against one 

country, let alone three. Known as the “national epic” among Paraguayans, the war resulted in 

the loss of 90 percent of the country’s male population. Solano López also died in the conflict. 

Ultimately, Paraguay faced a lengthy occupation by victorious Alliance forces and the loss of

territory to both Brazil and Argentina. 

Colorado and Liberal Party Rule: Even after their occupation of Paraguay ended in 1876, 

Argentina and Brazil remained involved in Paraguay’s affairs through association with its 

competing political parties. Brazil backed the National Republican Association-Colorado Party, 

which dominated Paraguayan politics from the 1880s to 1904. The Colorados dismantled the 

unique brand of socialism that Francia had established in Paraguay. In order to raise funds, 

Colorado politicians rapidly sold much of Paraguay’s state-owned land. Foreign businesses 

swooped in and assembled vast expanses of farmland, and many peasants were forced from plots 

they had farmed for generations. The Liberal Party castigated the Colorados for corruption, as 

many politicians raked in profits and themselves became large landowners. Equitable land 

distribution reached its nadir in 1900, when 79 persons owned half the country’s land. 

In 1904 tensions between the Liberal and Colorado parties erupted into violence. At issue was 

the state’s land distribution policy. The Liberal Party sided with peasant protesters calling for 

more equitable division of the state’s holdings. With support from Argentina, the Liberals gained 

the upper hand after four months of fighting. The conflict had begun as a popular revolt against 

the corrupt Colorado administration, but the Liberal Party soon devolved into corrupt factions of 

its own. Infighting and factionalism dominated the Liberal Era (1904−36). Liberal laissez-faire 

economic policies proved to have little more benefit to Paraguayan peasants than did the policies 

of the Colorados. Instead, large landowners took further control of the countryside, creating a 

near-hacienda system of agricultural production. 

The Chaco War and the February Revolution: Border tensions between Paraguay and Bolivia 

over the Chaco region led to war in 1932. Paraguay had long owned the region but failed to settle 

or develop the land. Bolivia’s loss of territory and access to the coast in the War of the Pacific 

(1879−84) and its interest in the oil reserves of the Chaco led to increasing tension between the 

countries. Years of negotiation failed to produce a compromise. As war approached, Bolivia 

seemed to have the military advantage, with greater wealth and a larger population and army. 

However, Paraguay’s zeal in protecting its homeland, unsettled as it was, overwhelmed the 

Bolivian forces. After more than two years of fighting, the two sides reached a truce in July 1935 

that ended the conflict and reaffirmed Paraguay’s control of the region. 

The political fallout from the war temporarily crippled the Liberal Party. In February 1936, 

members of the army staged a military coup, ending 32 years of Liberal rule. The Febrerista 

Revolutionary Party, more commonly known as the Febreristas, recalled Colonel Rafael Franco 

from exile to serve as president, but Franco’s fascist-style reforms brought quick opposition. In 

August 1937, the army rebelled and restored the Liberals to power. In 1939 the Liberals chose 

General José Félix Estigarribia, a hero of the Chaco War, as president. Estigarribia assumed 

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“temporary” dictatorial powers in February 1940 but promised the dictatorship would end as 

soon as a workable constitution was written. In order to avoid anarchy, Estigarribia vigorously 

pursued a reformist agenda. A new constitution was approved in August 1940 (and remained in 

effect until 1967). It ostensibly created a “strong, but not despotic” presidency, but by greatly 

expanding the power of the executive branch, the constitution served to formalize Paraguay’s 

dictatorial tendencies. 

The World War II Era: Following Estigarribia’s death in a plane crash in September 1940, his 

successor as president, War Minister Higinio Morínigo, quickly banned both Febreristas and 

Liberals and clamped down drastically on free speech and individual liberties. The outbreak of 

World War II eased Morínigo’s task of ruling Paraguay because it stimulated demand for 

Paraguayan export products, and U.S. policy toward Latin America at this time made Paraguay 

eligible for major economic assistance. Nevertheless, Morínigo’s regime was pro-Axis, and 

much to the displeasure of the United States and Britain, he refused to act against German 

economic and diplomatic interests until the end of the war. 

The Allied victory convinced Morínigo to liberalize his regime, and Paraguay experienced a 

brief democratic opening, but in 1947 revolutionaries (an unlikely coalition of Febreristas, 

Liberals, and communists) attempted to overthrow Morínigo. They were crushed, however, when 

the Colorados, long dormant in Paraguayan politics, rushed to Morínigo’s aid. Lieutenant 

Colonel Alfredo Stroessner Mattiauda, then commander of an artillery regiment, took decisive 

action that is credited with saving Morínigo’s administration. The fighting simplified Paraguayan 

politics by eliminating all parties except the Colorados. As had often happened in the past, 

however, the Colorados split into rival factions, and a group of Colorado military officers, 

including Stroessner, eventually removed Morínigo from office. 

The Stronato: In 1950 moderate Federico Chaves came to power, but before long Chaves, too, 

fell to revolutionaries. This time Lieutenant Colonel Stroessner led a coup against the established 

leadership. In 1954 the Colorados reluctantly nominated Stroessner as president, beginning an 

unparalleled period of stability in Paraguayan politics known as the Stronato. Stroessner ruled as 

dictator and succeeded, at least on one front, where previous Paraguayan leaders had failed: he 

stayed in power for nearly 35 years. During his first days in office, Stroessner declared a state of 

siege, which was renewed every 60 days thereafter, as required by the constitution. Stroessner 

won unopposed reelection every five years until 1988. Although brutally autocratic, Stroessner 

brought much-needed stability to Paraguay’s economic sector. He adhered to the austerity policy 

of the International Monetary Fund (IMF) and made Paraguay more attractive and safer for both 

international and domestic companies. He initiated large improvement projects⎯such as the 

building of the Itaipú Dam⎯that provided jobs to poor Paraguayans. The Cold War caused the 

United States to look past Stroessner’s authoritarianism and partner with Paraguay as it remained 

free of communist influence. 

In April 1987, Stroessner announced that the state of siege would finally be lifted. This decision 

proved to be his undoing. Government officials announced following the 1988 election that 

Stroessner had received 89 percent of the vote to win his eighth consecutive term as president. 

However, rivals, now somewhat freed to voice dissent, cited widespread fraud in the election. In 

February 1989, Stroessner’s long-time adversary, General Andrés Rodríguez, led a coup that 

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brought an end to the Stronato. Rodríguez won the presidency as a Colorado candidate in 

elections held in May 1989 and, as president, proceeded to initiate political, legal, and economic 

reforms and to seek a rapprochement with the international community. 

Toward Democracy: In the vacuum that resulted from Stroessner’s ouster, democratic reforms 

became viable. Paraguay’s first municipal elections took place in May 1991. A new, more 

democratic, constitution followed in June 1992. In an important break from the military, 

Paraguayans, in May 1993, elected Colorado Party candidate Juan Carlos Wasmosy as the first 

civilian president in nearly half a century. The transition to democracy was not without setbacks, 

however. In 1996 a standoff occurred between President Wasmosy and popular General Lino 

César Oviedo Silva over Wasmosy’s plan to restructure the military. Oviedo demanded that 

Wasmosy resign, and, with the support of 5,000 troops, forced Wasmosy to seek temporary 

asylum in the U.S. Embassy. Oviedo then attempted to run as the Colorado Party candidate in the 

1998 presidential election but was forced out of the race and confined when the Supreme Court 

upheld his conviction for participation in the 1996 coup attempt. Ultimately, Raúl Cubas Grau, a 

wealthy engineer and Oviedo loyalist, became the Colorado Party candidate and was elected 

president. 

The credibility of Paraguay’s government deteriorated as violence overshadowed elections. In 

1999 Vice President Luis María Argana Ferraro, leader of the conservative faction of the 

Colorado Party, was assassinated. Many felt that President Cubas Grau was an instigator, though 

not an active participant, in the assassination of his rival within the party. Protesters took to the 

streets demanding Cubas Grau’s resignation. With an impeachment trial pending, Cubas Grau 

resigned in March 1999 and sought political asylum in Brazil. Luis González Macchi, president 

of the Senate, served out Cubas Grau’s term. 

Since 2000, corruption and harsh divisions have continued to characterize the Paraguayan 

government. Although elections have become increasingly democratic, Paraguay has yet to settle 

into an extended period of functional democratic governance. In 2002 an alliance of farmers, 

trade union members, and leftist organizations staged massive protests throughout the country. 

They denounced free-market economics and called for the government to restore state control of 

the economy. In early 2003, González Macchi, whose administration was widely regarded as 

corrupt, was tried but found not guilty in a Senate impeachment trial for corruption and 

mismanagement. Economic problems deepened as the country continued to incur debt. 

Nevertheless, the April 2003 elections passed off without violence or protest. Oscar Nicanor 

Duarte Frutos of the Colorado Party won the presidency and was inaugurated on August 15, 

2003. Since his election, Duarte has succeeded in restoring Paraguay’s relationship with the IMF 

and partially stabilizing the economy as a result of various reform initiatives. His efforts to cut 

corruption have won widespread public support. However, continued rumors of assassination 

plots suggest that Paraguay’s legacy of political instability may persist. 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

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GEOGRAPHY 

Location: Paraguay is a landlocked country located in central 

South America. Bolivia lies to the north, Brazil to the east, and 

Argentina to the south and west. 

Size: Paraguay encompasses 406,750 square kilometers, 

approximately the same size as the state of California. Paraguay 

lost significant territory as a result of the War of the Triple Alliance 

(1865−70). The country gained territory in the Chaco War (1932−35), 

fixing its present borders. 

Land Boundaries: Paraguay shares borders with Argentina (1,880 kilometers), Brazil (1,290 

kilometers), and Bolivia (750 kilometers). 

Length of Coastline: None. Paraguay is landlocked. 

Maritime Claims: None. 

Topography: Paraguay has two distinct topographic regions, separated by the Paraguay River. 

To the east of the river, about 40 percent of the country’s territory, lies the fertile and subtropical 

Paraneña region, which is home to most of Paraguay’s population. The Paraná plateau, within 

the Paraneña region, receives more rainfall than any other area of the country and is prone to 

flooding. In contrast, the western portion of the country, known as the Chaco region, is largely 

arid, flat, and unsuitable for cultivation. The extreme northwestern region is mostly desert. 

Paraguay has only modest mountain ranges, located in the southeast. The highest point, Cerro 

Pero, has an elevation of 842 meters. 

Principal Rivers: Most of Paraguay’s rivers and tributaries traverse the eastern portion of the 

country. The Chaco region, in contrast, has only small streams and seasonal bodies of water. 

Three major rivers⎯the Paraguay, Paraná, and Pilcomayo⎯define most of Paraguay’s borders 

and serve as invaluable transportation routes, sources of hydropower, and drainage conduits. The 

Paraguay essentially bisects the country from north to south, extending for nearly 1,200 

kilometers through Paraguay. The port city of Asunción sits on the Paraguay. The Paraná 

stretches for 800 kilometers in Paraguay, forming the eastern and southern border with Argentina 

before merging with the Paraguay and continuing south to the Río de la Plata Estuary at Buenos 

Aires. Not as deep as the Paraguay, the Paraná is navigable by large ships only to Encarnación. 

The Pilcomayo, Paraguay’s third largest river, marks the southwestern border between 

Paraguay’s Chaco region and Argentina. The Pilcomayo empties into the Paraguay River just 

above Asunción. 

Climate: The geographical divide that defines Paraguay’s topography also pertains to the 

country’s climatic conditions. The Pananeña region in the east has a subtropical climate while 

the Chaco region in the west experiences tropical conditions. The Pananeña region receives 

abundant precipitation and has more moderate temperature changes throughout the year. From

October to March, it has a lengthy summer season and from May to August, its winter. April and 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

September are short transition months between the two major seasons in the Paraneña region. 

Throughout the year, the eastern forests of Paraguay receive ample rainfall⎯more than 1,500 

millimeters annually. The Chaco region climate is characterized by wet-and-dry extremes. Much 

of the region has consistently high temperatures and semi-arid conditions. In the summer, 

temperatures in the Chaco reach upwards of 38o C. Temperatures fall only slightly during the 

winter months. The far northwestern reaches of the country are the driest in terms of annual 

rainfall. The plains receive about 800 millimeters of rainfall each year. 

Natural Resources: Paraguay has fertile soil and lush forests that support its agriculture and 

timber industries. The country has few proven mineral resources, but surveys have located 

significant deposits of manganese, limestone, and iron ore. Hydropower is a considerable 

resource. In recent years, hydroelectric projects have further harnessed the power of the rivers to 

generate electricity, which in turn has created revenue for Paraguay. 

Land Use: The vast majority of land in Paraguay is undeveloped. Although agriculture is a vital 

part of the Paraguayan economy, only 7.6 percent of the country is arable land, and only 0.23 

percent is planted to permanent crops. Paraguay has about 9 million hectares of arable land, 30 

percent of which is cultivated. Land reform has failed in Paraguay, resulting in the top 1 percent 

of landowners controlling two-thirds of the country’s agricultural land. The Chaco region, mostly 

arid, makes up nearly 60 percent of Paraguay’s land but supports less than 2 percent of the 

population and only about 3 percent of national economic activity. The eastern plains region 

supports both the majority of the country’s population and the preponderance of economic 

activity. 

Environmental Factors: Deforestation is a concern in Paraguay. Experts estimate that Paraguay 

lost 0.5 percent of its forest cover each year between 1990 and 2000. Paraguay also has a 

growing pollution problem. Many of the country’s rivers suffer from toxic dumping. Tanneries 

are particularly harmful, releasing mercury and chromium into rivers and streams. Runoff from

toxic chemicals used by farmers also seeps into Paraguay’s waters. In the Chaco, the salination 

of already arid land makes farming even more difficult. Furthermore, poachers have almost free 

rein in Paraguay and continue to foster the illegal trade in armadillo and crocodile skins.

Time Zone: Paraguay operates four hours behind Greenwich Mean Time (GMT) from April to 

September, and three hours behind GMT from October to March. 

SOCIETY 

Population: Paraguay has a population of about 6.3 million people, with a population growth 

rate of 2.5 percent projected for 2005. About two-thirds of inhabitants live in urban areas, and 

nearly 98 percent reside in the Paraneña region in the east. The fastest growth rates within 

Paraguay have been in the Chaco region and in the vicinity of Asunción. 

Demography: Paraguay’s population is relatively young, with a median age of 21 years. About 

38 percent of the population is 14 years of age or younger, 57 percent is 15 to 64, and less than 5 

percent of the population is 65 or older. According to 2005 estimates, Paraguay’s birthrate stands 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

at 29.4 births per 1,000 population, and its death rate at 4.5 deaths per 1,000 population. The 

infant mortality rate is 25.6 deaths per 1,000 live births. Paraguay’s population growth results 

exclusively from its own people. The average Paraguayan woman has four children, and the 

country had an estimated net migration rate of negative 0.08 migrants per 1,000 in 2005. 

Paraguay had an average life expectancy of nearly 75 years (72.4 years for men and 77.6 years 

for women) in 2005, ranking it in the middle of the spectrum among South American countries. 

Ethnic Groups: Paraguay has a homogeneous population. About 95 percent of Paraguayans 

classify themselves as mestizo (mixed Spanish and Indian ethnicity). A small population of 

unassimilated Amerindians, about 2 percent of Paraguay’s population, remains, mostly in the 

Chaco region. Additionally, the population includes some unassimilated immigrant peoples, such 

as small groups originating from Spain, Japan, Italy, Portugal, and Germany. 

Languagues: Paraguay has two official languages. About 90 percent of the population speaks 

Guaraní, while 75 percent speaks Spanish. Nearly half the population is bilingual. 

Religion: Religious life in Paraguay centers on the Roman Catholic Church. Nearly 90 percent 

of the population adheres to Roman Catholicism, including most of the mestizo population. 

Protestantism exists in pockets, along with evangelical Christianity, Judaism, and Mormonism. 

An Islamic community in Alto Paraná has received substantial immigration from Lebanon in 

recent years. Additionally, a sizable Mennonite community, mostly composed of German 

immigrants, exists in the western department of Boquerón. 

Paraguay’s constitution guarantees religious freedom, and there has been little indication that

non-Catholics have suffered for their beliefs. All religious groups must register with the 

government. Although most members of the government are Roman Catholics and the 

government observes Roman Catholic holidays, Paraguay maintains a secular state. 

Education and Literacy: Historically, Paraguay has undervalued education. During Alfredo 

Stroessner Mattiauda’s presidency (1954–89), education initiatives took a backseat to economic 

concerns and the task of controlling political adversaries. Teacher salaries fell to extremely low 

levels under the dictatorship. The constitution of 1992 attempted to remedy the long neglect of 

education. Article 85 mandates that 20 percent of government revenue be designated for 

educational expenditures. This measure, however, has proved impractical and has been largely 

ignored. 

Nevertheless, democratization has been accompanied by a gradual improvement in the education

system. Spending on education has increased, reaching 4.7 percent of gross domestic product in 

2000, up from 1.7 percent in 1989. Much of the increased funding went to raise teacher salaries 

and update curricula. Still, Paraguayan children spend far less time in school than in most other 

South American countries. Schools in Paraguay average about 700 contact hours annually, 

compared with 1,500 in countries such as Chile. Students are required to attend school for nine 

years, and surveys indicate that Paraguay has a net primary school attendance rate of 92 percent. 

Public education is free to all, but dropout rates remain high. 

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Paraguay does not have an adequate university system. Until the 1990s, the state National 

University and the Catholic University served Paraguay’s entire population. As part of the 

educational reforms of the 1990s, the government created 10 new universities, but the entire 

system is regarded as poor in quality. In 2003 Paraguay’s national military academy admitted 

female cadets for the first time, opening another door for women pursuing education. 

In 2003 Paraguay had an estimated literacy rate of 94 percent, with very little differential 

between men and women (94.9 percent to 93 percent, respectively). Illiteracy rates exceed the 

national average in rural areas. The 2001 census found that 15 percent of women and 10 percent 

of men living in rural areas were illiterate. 

Health: In terms of major health indicators, Paraguay ranks near the median among South 

American countries. In 2003 Paraguay had a child mortality rate of 29.5 deaths per 1,000 

children, ranking it behind Argentina, Colombia, and Uruguay but ahead of Brazil and Bolivia. 

The health of Paraguayans living outside urban areas is generally worse than those residing in 

cities. Many preventable diseases, such as Chagas’ disease, run rampant in rural regions. 

Parasitic and respiratory diseases, which could be controlled with proper medical treatment, drag 

down Paraguay’s overall health. In general, malnutrition, lack of proper health care, and poor 

sanitation are the root of many health problems in Paraguay. 

Health care funding from the national government increased gradually throughout the 1980s and 

1990s. Spending on health care rose to 1.7 percent of the gross domestic product (GDP) in 2000, 

nearly triple the 0.6 percent of GDP spent in 1989. But during the past decade, improvement in 

health care has slowed. Paraguay spends less per capita (US$13−20 per year) than most other 

Latin American countries. A 2001 survey indicated that 27 percent of the population still had no 

access to medical care, public or private. Private health insurance is very limited, with pre-paid 

plans making up only 11 percent of private expenditures on health care. Thus, most of the money 

spent on private health care (about 88 percent) is on a fee-for-service basis, effectively 

preventing the poor population from seeing private doctors. According to recent estimates, 

Paraguay has about 117 physicians and 20 nurses per 100,000 population. 

In 2003 the prevalence rate of human immunodeficiency virus/acquired immune deficiency 

syndrome (HIV/AIDS) in Paraguay was estimated at 0.5 percent of the population, and officials 

reported 600 deaths from AIDS. The United Nations cautions that although the prevalence rate in 

Paraguay remains low, HIV/AIDS is increasing among stigmatized population groups. 

Transmission of the virus is primarily through sexual contact. According to 2004 estimates, 

nearly 15,000 Paraguayans were infected with HIV/AIDS. 

Welfare: Nearly 200,000 Paraguayans survive through subsistence farming and are only 

marginally tied to the rest of the economy. A few landowners control most of the country’s land, 

and most peasants do not own land. Paraguay has been slower to urbanize than most Latin 

American countries, and employment opportunities have grown only gradually. In 2001 experts 

estimated that nearly 20 percent of the Paraguayan population lived on less than US$1 per day, 

and that one-third of the population could not afford to buy a basket of basic goods. Income

polarization increased steadily during the 1990s. The plight of ordinary Paraguayans has been 

aggravated by political corruption and infighting, which has stalled economic development. With 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

the stability brought by the election of President Oscar Nicanor Duarte Frutos in 2003, there is 

some optimism that conditions might improve in Paraguay. The country’s young population 

could fuel increased productivity, given a favorable economic environment. 

Paraguay has a social insurance program, dating back to 1943. This system draws its funding 

from three sources: employees (who contribute 9 percent of personal earnings), employers (14 

percent of total payroll), and the government (1.5 percent of government earnings). These funds 

finance old-age, sickness, disability, and maternity benefits. To qualify for an old-age pension, 

one must be 60 years of age and have contributed to the program for 25 years, or 55 years of age 

having contributed for 30 years. Benefits are 100 percent of the average earnings during the last 

three years of work, up to 300 times the daily minimum wage. Temporary and permanent 

disability benefits are provided to employed workers. Self-employed workers can contribute on a 

voluntary basis. Mothers receive 50 percent of their average salary for three weeks before the 

expected delivery date and six weeks after maternity leave. Milk vouchers are provided to those 

mothers unable to nurse. 

ECONOMY 

Overview: Paraguay has a market economy characterized by a large informal sector. Agriculture 

dominates the economy, but unequal land distribution has resulted in a large class of peasant 

farm laborers. A large portion of the population is uninvolved in the formal economy, instead 

existing as subsistence farmers. In recent years, the economy has grown as a result of increased 

agricultural exports, especially soybeans. Reforms in fiscal and monetary policy also have 

improved Paraguay’s economy. Inflation has dropped, and the currency has appreciated 

gradually. Nevertheless, urban unemployment and underemployment have been problems

throughout Paraguay’s history. Paraguay has the economic advantages of a young population and 

vast hydroelectric power but has few mineral resources, and political instability has undercut 

some of the economic advantages present. The government welcomes foreign investment but 

historically has been unable to provide a stable, corruption-free environment for businesses. 

Smuggling and a large black market have deterred many foreign investors from entering the 

Paraguayan market. 

Gross Domestic Product (GDP): In 2004 Paraguay had an estimated GDP of US$6.5 billion, 

with a 2.9 percent rate of GDP growth. Even with the upturn, Paraguay’s 2004 GDP is less than 

it was in 2000. 

Government Budget: In 2004 Paraguay recorded a budget surplus of US$110 million, more 

than 1.5 percent of its gross domestic product. Increased tax revenue, sparked by a growing 

economy, caused revenue growth to outpace spending growth. 

Inflation: Price inflation fell dramatically between 2003 and 2004, from 14.2 percent to a 30-

year low of 4.3 percent. President’s Duarte’s economic reforms and austerity programs have 

produced results more rapidly than many expected. Experts forecast that the inflation rate in 

Paraguay likely will rise in coming years but remain below 10 percent. 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

Agriculture, Forestry, and Fishing: Agriculture accounts for about 20 percent of Paraguay’s 

annual gross domestic product⎯25 percent in 2004⎯and virtually all of the country’s export 

earnings. It is Paraguay’s largest and most consistent source of employment⎯employing about 

45 percent of the working population. In addition to those engaged in the formal agricultural 

sector, thousands of Paraguayan families survive through subsistence farming. 

Paraguay produces enough basic foodstuffs to be largely self-sufficient. Corn, cassava, and 

wheat are the main food crops. In 2004 Paraguay’s wheat production reached a record level, 

producing a yield of 750,000 tons. About half of this total went to meet Paraguay’s domestic 

needs. Because of the low demand for wheat on the international market, much of the surplus 

went into silos rather than abroad. Depending on international market prices and demand, 

Paraguay alternates between two dominant export crops⎯cotton and soybeans. In 2004 nearly 2 

million hectares were dedicated to soybean cultivation. With an average yield of 2.6 tons per 

hectare, the soybean harvest for the 2004–5 growing season is estimated at more than 5 million 

tons. Cotton also remains an important source of agricultural employment. In 2004–5 about 

225,000 hectares were planted with cotton, producing a seed harvest of 225,000 tons. On a 

smaller scale, Paraguay produces oilseeds and sugarcane for export. Paraguay is using 

technology to increase agricultural yields. It is the world’s sixth-largest producer of genetically 

modified (GM) crops. In 2004 Paraguay had about 1.6 million hectares dedicated to GM crops. 

Paraguay’s eastern plains support the country’s declining ranching industry. Behind soybeans 

and cotton, beef exports make up a significant part of Paraguay’s agriculture sector. 

Additionally, Paraguay produces an adequate supply of beef, pork, and dairy products to meet 

domestic needs. The discovery of cases of foot-and-mouth disease in 2002 and 2003 led to a ban 

on Paraguayan beef in many countries. However, in 2004 Paraguay’s meat production and 

exports rebounded. As a result of rising international prices and the recovery of important 

markets, especially Chile, Paraguay’s meat exports rose to US$143 million in 2004. Presently, 

Paraguay has a national herd numbering between 9 and 10 million head of cattle. 

Paraguay’s forests adequately meet domestic needs for lumber and fuelwood. However, logging 

for export, both legally and illegally, has thinned Paraguay’s once abundant forests, resulting in a 

ban on the export of logs since the 1970s. The World Bank has predicted that much of 

Paraguay’s primary forest cover would be exhausted by 2005. Deforestation has occurred most 

rapidly in the east, because transportation costs in the remote Chaco region have deterred loggers 

from using forests in that region. In 2002 sawn wood exports totaled US$13.7 million.

The fishing industry in Paraguay exists almost solely to meet domestic demand. In 2001 the 

fishing catch totaled about 25,110 tons. 

Mining and Minerals: Unlike many South American countries, Paraguay has few mineral 

resources and very little history of mining success. Foreign companies have explored Paraguay 

in recent years, searching for overlooked mineral deposits. Small extraction projects exist, 

seeking lime, clay, and the raw materials necessary to make cement, but the country’s iron and 

steel manufacturers must import raw materials from neighboring countries. 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

Industry and Manufacturing: The industrial sector produces about 25 percent of Paraguay’s 

gross domestic product (GDP) and employs about 31 percent of the labor force. Output grew by 

2.9 percent in 2004, after five years of declining production. Traditionally an agricultural 

economy, Paraguay is showing some signs of long-term industrial growth. The pharmaceutical 

industry is quickly supplanting foreign suppliers in meeting the country’s drug needs. 

Paraguayan companies now meet 70 percent of domestic consumption and also have begun 

exporting drugs. Strong growth also is evident in the production of edible oils, garments, organic 

sugar, meat processing, and steel. Nevertheless, capital for further investment in the industrial 

sector of the economy is scarce. Following the revelation of widespread financial corruption in 

the 1990s, the government is still working to improve credit options for Paraguayan businesses. 

In 2003 manufacturing made up 13.6 percent of the GDP, and the sector employed about 11 

percent of the working population in 2000. Paraguay’s primary manufacturing focus is on food 

and beverages. Wood products, paper products, hides and furs, and non-metallic mineral 

products also contribute to manufacturing totals. Steady growth in the manufacturing GDP 

during the 1990s (1.2 percent annually) laid the foundation for 2002 and 2003, when the annual 

growth rate rose to 2.5 percent. 

Energy: Paraguay relies almost solely on hydroelectric power to meet its energy needs. The 

Itaipú Dam, completed in 1984, has the world’s second largest power-generating capacity⎯13.3 

gigawatts. The dam is located on the Paraguay River, and Paraguay and Brazil evenly share the 

ownership, operation, and electricity generated. Additionally, Paraguay co-owns another major 

hydropower plant, Yacyretá, with Argentina. Paraguay uses only a small portion of the energy it 

generates through Itaipú and Yacyretá. In 2002 Paraguay generated more than 48 billion 

kilowatt-hours of energy. It consumed only 2.5 billion kilowatt-hours while exporting 45.9 

billion kilowatt-hours. Paraguay will have even more hydroelectricity to export when planned 

new turbines are installed at Itaipú and the Yacyretá dam is fully completed. 

Paraguay has no oil reserves; it relies on imported oil to meet its limited need for oil-produced 

energy. The Paraguayan government owns Petróleos Paraguayos, which is responsible for all 

distribution of oil products. The state accepts bids from international oil companies, selecting a 

few companies annually to meet the country’s demand. Presently, Paraguay does not produce or 

consume natural gas. 

Services: The services sector made up nearly 50 percent of Paraguay’s gross domestic product in 

2004 and employed about 19 percent of Paraguay’s working population. The importation of 

goods, especially from Argentina and Brazil, for sale and illegal reexportation creates service 

industry jobs. The services sector had a moderate growth rate of 0.9 percent from 1990 to 2003. 

The sector decreased by 7.8 percent in 2002, before rebounding in 2003 with a 1.6 percent 

growth rate. Instability in the economy and a large black market have hampered development of 

the formal services sector in Paraguay. 

Banking and Finance: Paraguay’s banking and financial services industry is still recovering 

from the liquidity crisis of 1995, when news of widespread corruption resulted in the closure of 

several significant banks. Reform efforts spurred by the International Monetary Fund (IMF) and 

World Bank helped restore some credibility to Paraguay’s banking industry. Still, a paucity of 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

credit options hinders the overall economy. Paraguay has a long history as a money-laundering 

center. The government has taken steps to curb the problem, but enforcement of anti-laundering 

legislation remains inconsistent. 

Foreign companies either partially or wholly own most banks and financial institutions in 

Paraguay. Paraguayan banks hold less than 10 percent of deposits. Of the 16 banks operating in 

Paraguay in 2003, 50 percent were wholly foreign-owned and 25 percent were partially owned 

by foreign companies. Paraguay’s Central Bank exists to stabilize the financial sector, making 

sure that another run on banks, such as the one that occurred in 1995, does not recur. The 

Superintendencia de Bancos regulates the banking system, monitoring the percentage of nonperforming loans in the banking system. Bank deposits rose significantly in 2004, along with the 

percentage of local currency in total deposits. Local currency deposits increased by 26 percent in 

2004, a sign that Paraguayans are gaining confidence in the stability of Paraguayan currency. In 

another promising development, interest rates dropped dramatically in 2004, from 50 percent in 

2003 to 27 percent in 2004. 

Paraguay’s stock market began trading in October 1993. The tradition of family-owned 

companies and economic instability kept investment low throughout the 1990s. The value of 

shares on the Asunción stock exchange rose by 390 percent in 2004, reaching US$17.5 million. 

Tourism: Paraguay has a small, struggling tourism industry. Total tourism receipts declined 

annually from 2000 through 2002. In 2003 Paraguay’s hotel occupancy rate was 38 percent. It 

increased by 15 percent in 2004. Small gains in tourism have come from business rather than 

leisure travelers. For many years, Paraguay served as a central market for smuggled, duty-free 

goods. However, crackdowns by the governments of Brazil and Argentina have stemmed the 

flow of shoppers traveling to Paraguay looking for smuggled items. 

Labor: Paraguay’s formal labor force was estimated to total about 2.7 million workers in 2004. 

About 45 percent worked in the agricultural sector, 31 percent in the industrial sector, and 19 

percent in the services sector. Unemployment was estimated at about 15 percent. Paraguay’s 

constitution guarantees the right of workers to unionize and bargain collectively. About 15 

percent of workers are members of one of Paraguay’s 1,600 unions. Strikes are legal and not 

uncommon. 

The 2001 census found that 5 percent of Paraguay’s workforce was under the age of 14. 

Although Paraguay ratified the International Labour Organization’s Minimum Age Convention 

in 2004, child labor continues to be prevalent. Nearly 14 percent of children between the ages of 

5 and 17 are employed, many in poor conditions and for negligible pay. The government has 

mandated a minimum wage of approximately US$158 per month for private-sector employees. 

Government employees have no minimum wage. The standard workweek is 48 hours. In 2004 

Paraguay’s unemployment rate stood at 15 percent. 

Foreign Economic Relations: Paraguay is a member of the Common Market of the South 

(Mercado Común del Sur⎯Mercosur). Most of Paraguay’s trade takes place with neighbors 

Brazil and Argentina. In 2002 Paraguay conducted more than US$400 million in trade with 

Argentina and nearly US$800 million with Brazil. Paraguay is also a member of the Inter13
Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

American Development Bank, Latin American Integration Association, and Latin American 

Economic System and a signatory to the agreement creating the South American Community of 

Nations. In 2004 Paraguay signed an energy cooperation agreement with Venezuela to purchase 

oil and petroleum. Venezuela agreed to concessional financing that allowed Paraguay to pay over 

a 15-year period at a nominal interest rate. 

Imports: Imports totaled US$3.3 billion in 2004. Principal import commodities included 

automobiles, chemical products, consumer goods, tobacco, petroleum, and machinery. Brazil 

was the leading source of imports to Paraguay (24.3 percent), followed by the United States 

(22.3 percent), Argentina (16.2 percent), China (9.9 percent), and Hong Kong (5 percent). 

Experts note that import statistics are difficult to confirm for Paraguay because as much as half 

of all imports are illegally re-exported to Argentina or Brazil. Imports from Mercosur countries 

continue to rise, up to 57 percent in 2003. 

Exports: Paraguay’s export revenues totaled about US$2.9 billion in 2004. Agricultural 

commodities continue to drive Paraguay’s export totals. Soybeans are particularly vital, 

accounting for 35 percent of total export revenues in 2003. Other agricultural cash crops include 

cotton, sugarcane, cassava, sunflowers, wheat, and corn. Other significant exports include feed, 

meat, edible oils, electricity, wood, and leather. Even as Paraguayan export revenue has 

fluctuated, Brazil remained Paraguay’s principal export destination (27.8 percent in 2004), 

followed by Uruguay (15.9 percent), Italy (7.1 percent), Switzerland (5.6 percent), Argentina 

(4.3 percent), and the Netherlands (4.2 percent). In 2003 nearly 60 percent of Paraguayan exports 

went to Mercosur countries. 

Trade Balance: Paraguay had a negative trade balance of about US$400 million in 2004. Higher 

earnings from soybeans and cotton could not offset the surge in imported consumer goods and 

petroleum products. 

Balance of Payments: After years of negative balances, Paraguay achieved a positive balance of 

payments totaling US$234 million in 2003. In 2004, however, the current account had an 

estimated deficit of US$35.1 million.

External Debt: Paraguay has a sustainable debt level according to the International Monetary 

Fund (IMF). External debt totaled about US$3.4 billion in 2004, low compared to most Latin 

American countries. Continued reductions in Paraguay’s debt to gross domestic product ratio are 

expected in coming years. Paraguay paid US$412 million in debt service to the IMF in 2004. 

Foreign Investment: Foreign investment in Paraguay nearly disappeared in 2002. After direct 

foreign investment of US$84 million in 2001, only US$9 million in investment came from

abroad in 2002. This drop was largely the result of the financial crisis in Argentina and the 

banking collapse in Paraguay. Direct foreign investment rebounded in 2003⎯reaching US$90.8 

million for the year. 

Foreign Aid: Paraguay has depended on the International Monetary Fund (IMF) and World 

Bank for economic development assistance. The World Bank has promised Paraguay assistance 

totaling US$325 million between 2003 and 2007. Projects currently underway in Paraguay aim

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

to improve education, transportation, and rural development. The U.S. Agency for International 

Development (USAID) supports a variety of programs in Paraguay designed to bolster 

democratic development, environmental and health improvement, and the elimination of 

corruption. The U.S. Peace Corps has nearly 200 volunteers in Paraguay. In 2004 the US 

government announced that Paraguay would be excluded from consideration for funds from the 

Millennium Challenge Account, citing judicial, political, and public corruption as reasons for the 

exclusion. 

Currency and Exchange Rate: Paraguay’s currency is the guarani (PYG). In mid-October 

2005, US$1 equaled about PYG6155. 

Fiscal Year: Paraguay’s fiscal year coincides with the calendar year. 

TRANSPORTATION AND TELECOMMUNICATIONS

Overview: Paraguay’s transportation system ranges from adequate to poor, largely depending on 

the region of the country. The country has a network of roads, railroads, rivers, and airports, but 

significant infrastructure and regulation improvements are needed. 

Roads: Estimates vary on the total extent of Paraguay’s road system⎯from more than 60,000 

kilometers to less than 30,000 kilometers. The discrepancies seem to be the result of differing 

standards regarding what constitutes a road. Thousands of kilometers of unpaved rural roads 

exist. Paraguay has about 15,000 kilometers of paved, major feeder roads. The core network 

connects Asunción, Encarnación, and Ciudad del Este. The Trans-Chaco highway is only 

partially finished, the paved portion ending at Mariscal Estigarribia. Bolivia’s portion of the 

highway, in contrast, is entirely paved. For trade purposes, the paved highways from Ciudad del 

Este to the Brazilian port of Paranaguá are particularly important. Additionally, the roads 

connecting Paraguay to Buenos Aires are adequate. 

The number of automobiles has increased in recent years. Approximately 600,000 cars were in 

use in 2000, about half of which were stolen. Smuggling of cars from Brazil and Argentina 

remains a major problem. For many years, Paraguay was the only Common Market of the South 

(Mercado Común del Sur—Mercosur) country to allow for the importation of used cars, but this 

practice will end in 2006, in an attempt to curb the number of stolen cars entering the country. 

Railroads: The government owns the country’s sole railroad company, including a 438-

kilometer line from Asunción to Encarnación. An effort to privatize the company in 2002 failed 

when no buyer could be secured because of the steep investment required to make the line 

profitable. Currently, only a small section of the line is open. It is used for tourist traffic. 

Paraguay’s railroads operate on a standard 1.435-meter gauge. 

Ports: Villeta, located south of Asunción, serves as Paraguay’s primary port. Asunción, long the 

country’s only modern port, Encarnación, and San Antonio serve as the country’s other major 

ports. Paraguay’s ports are split between state and private ownership. The country’s 20 private 

ports, however, are far more efficient, handling nearly 90 percent of soybean exports. 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

Inland Waterways: Paraguay has 3,100 kilometers of inland waterways. The Paraguay and 

Paraná are the country’s two main rivers. The Paraguay River, with headwaters at Mato Grosso, 

Brazil, flows southward, converging with the Paraná in southwestern Paraguay, and then flowing 

to the Río de la Plata Estuary in Argentina, the entrance for the great majority of ships servicing 

Paraguay’s ports. 

Civil Aviation and Airports: Paraguay has 878 airports but only 12 with paved runways and 

only two that can receive four-engine commercial airplanes. The airport serving Asunción, 

located at Silvio Pettirossi, is the country’s major airport for international and domestic flights. 

The new (completed in 1996) Guaraní International Airport, located near Ciudad del Este and the 

Brazilian border, has been unable to compete with the nearby international airport at Foz do 

Iguaçu in Brazil. Improvements in technology are needed to bring Paraguay’s airports up to 

international standards. Paraguay privatized the state-owned Líneas Aéreas Paraguayas in 1994. 

Pipelines: Paraguay has no pipelines. 

Telecommunications: Paraguay has a meager telecommunications sector. It has the lowest 

fixed-line telephone density in South America, with five lines per 100 residents, compared with 

6.5 per 100 in Bolivia and more than 20 per 100 in Brazil and Argentina. Only 6 percent of the 

population has access to a landline connection. The state-owned Corporación Paraguaya de 

Comunicaciones (Copaco) is known for inefficiency and overstaffing. Privatization was 

attempted in 2002, but failed in the midst of the banking scandal. Paraguay’s meager telephone 

network has resulted in rapid growth for mobile phone companies. In 2004 mobile coverage for 

the country reached 34 percent. Four companies dominate the industry. As of 2003, there were 

1.8 million mobile telephones in Paraguay. The number has likely increased since then. 

Computers are scarce in Paraguay; only 6 percent of Paraguayans have a personal computer. Few 

Paraguayans (1.7 percent) have access to the Internet. In 2003 only about 120,000 Paraguayans 

were Internet users, and very little business is conducted over the Internet.

GOVERNMENT AND POLITICS 

Overview: Paraguay is a constitutional republic, guided by the democratic constitution of 1992, 

which replaced the highly authoritarian constitution that had been in force since 1967. The 

constitution provides for a division of government powers among three branches. 

Executive Branch: The president, heading the executive branch, is directly elected to a five-year 

term and serves as both chief of state and head of government. The president appoints a Council 

of Ministers composed of 18 members to oversee the various government ministries. The 

president has the power to initiate legislation as well as veto it. Currently, Nicanor Duarte Frutos 

(elected 2003) serves as president and Luis Castiglioni as vice president. Neither the president 

nor the vice president may be reelected. Paraguay’s next presidential election is scheduled for 

2008. 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

Legislative Branch: The Senate and Chamber of Deputies compose the bicameral legislative 

branch of the government. The Senate consists of 45 members elected by a national popular vote 

to serve five-year terms. The 80-member Chamber of Deputies is elected through a departmental 

vote, for the same tenure. Legislative elections coincide with the presidential election. Seats in 

both the Senate and the Chamber of Deputies are allocated according to the percentage of the 

vote received by each party. Following an election, the parties, through a closed party list, fill 

their allotted Senate and Chamber seats. 

Corruption and political stalemates have eroded the popular status of the Congress. Since the 

return to democracy in 1992, the Congress has acted primarily as a negative check on the 

president’s agenda. Delay tactics and the selling and buying of votes are common practices, 

according to some experts. 

Judicial Branch: Paraguay’s constitution provides for an independent judiciary. The Supreme 

Court of Justice serves as the country’s highest court, hearing appeals from the lower courts and 

deciding constitutional questions. Nine judges serve on the Supreme Court. Below the Supreme 

Court, Paraguay has five appellate courts: civil and commercial, criminal, labor, administrative, 

and juvenile. The lowest level of the legal hierarchy includes minor courts and justices of the 

peace who mediate lesser infractions. Minor courts are divided into four functional areas: civil 

and commercial, criminal, labor, and juvenile. Any person convicted of a crime at the minor 

court level may appeal to an appellate court and then to the Supreme Court. A council composed 

of members agreeable to both the president and the Congress has the responsibility of appointing 

judges. Paraguay’s military has its own court system. 

Paraguay’s judicial branch was designed to operate free from political considerations. Few legal 

experts, however, would assert that this is actually the case. Politicians have long pressured 

judges to rule to their benefit. The Supreme Court experienced a purging in 2003–4 when the 

administration succeeded in replacing six of the court’s nine justices. Reformers hoped that the 

move would stem the corruption and political influence that have long plagued the court. 

Administrative Divisions: The 1992 constitution added the departmental level to Paraguay’s 

political spectrum, dividing Paraguay into 17 departments and the capital city of Asunción. In 

terms of population, Central, Alto Paraná, and Paraguiarí are the largest departments. 

Provincial and Local Government: Each department elects a governor and a departmental 

council. Additionally, the 1992 constitution delineated powers for Paraguay’s 228 municipalities. 

Local elections are scheduled for November 2005. 

Judicial and Legal System: Paraguay’s legal system is based on Roman law as well as French 

and Argentine codes. The Penal and Criminal Procedures Code of 2000 requires expedited oral 

hearings for all persons accused of a crime. Prosecutors must bring charges against a detained 

person within 180 days. Defendants are presumed innocent until proven guilty. Both the defense 

and prosecution may call witnesses. There is no trial by jury; the judge determines both the 

innocence or guilt and the punishment for any crimes committed. 

Electoral System: Following President Alfredo Stroessner’s nearly 35-year authoritarian rule, 

democracy reemerged in Paraguay in 1989. General elections are held every five years as 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

required by the constitution. Suffrage is universal at age 18 and compulsory up to age 75. In 

recent elections, nearly 70 percent of the eligible population voted. The president and vice 

president are elected by a simple majority of the popular vote. Members of the Congress are 

elected according to a system of proportional representation. Elections are conducted using 

secret ballots. In 2003, for the first time, Paraguay used electronic voting terminals to collect 

about half of all ballots cast. In light of past polling place irregularities, many believe that 

electronic voting will be less susceptible to manipulation. 

Politics and Political Parties: Paraguay’s Congressional seats are awarded proportionally to the 

country’s political parties⎯according to the percentage of votes they receive in each election. 

Thus, political parties tend to overshadow individual politicians. The National Republican 

Association-Colorado Party (Asociación Nacional Republicana-Partido Colorado—ANRPC)⎯has dominated modern Paraguayan politics since 1946 and following the reintroduction of 

democracy in 1992. The party’s candidate, Nicanor Duarte Frutos, won the most recent 

presidential election in 2003 with 37 percent of the vote. The ANR-PC was organized into a 

highly effective political machine under the Stroessner regime and continues to have a strong 

presence at the local and national level. 

The Authentic Radical Liberal Party (Partido Liberal Radical Auténtico⎯PLRA) serves as the 

leading opposition party. The party has resisted many of the economic liberalization plans 

fostered by Duarte. Other opposition parties include Beloved Fatherland (Patria Querida⎯PQ) 

and the National Union of Ethical Citizens (Unión Nacional de Ciudadanos Éticos⎯UNACE). 

Had opposition parties agreed on a compromise platform and candidate in 2003, the ANR-PC 

might have been ousted from power as a result of the lingering public resentment over the 

corrupt administration of the previous Colorado president, Luis González Macchi. Instead, 

division allowed the ANR-PC to maintain the presidency and its claim to be the world’s longestserving political party. 

Mass Media: As in many South American countries, radio is an important disseminator of 

information in Paraguay. More than 70 commercial and community radio stations broadcast 

daily across the nation. Paraguay also has four television stations and, as of 2004, about 750,000 

households with televisions. The country has five major daily newspapers: ABC Color, Diario 

Noticias, Última Hora, La Nación, and Diario Popular. They have a combined circulation of 

about 150,000 copies daily. The government does not censure Internet or television content or 

restrict academic freedom. 

Foreign Relations: Paraguay maintains close diplomatic relations with fellow Common Market 

of the South (Mercado Común del Sur⎯Mercosur) countries on economic, political, and social 

issues. In past years, Paraguay’s role as a conduit of black-market trade has caused tension with 

some Mercosur countries. Relations with the United States have been steady, especially as 

democratic reforms have flourished in Paraguay. The United States supported the ouster of 

authoritarian leader Stroessner and helped resolve the crisis that resulted from Paraguay’s 

contested 1998 election. Economic ties between the United States and Paraguay have rebounded 

after many years of decline during Paraguay’s economic collapse. The United States remains 

committed to providing some economic aid to Paraguay and to stopping money laundering in the 

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region. Separating itself from its neighbors, Paraguay remains the only South American country 

to recognize Taiwan diplomatically. 

Membership in International Organizations: Paraguay belongs to the United Nations and 

many of its specialized agencies. Paraguay is also a member of the Common Market of the South 

(Mercado Común del Sur—Mercosur), International Criminal Police Organization (Interpol), 

International Labour Organization, International Monetary Fund, Latin American Economic 

System, Latin American Integration Association, Organization of American States, Rio Group, 

and World Bank. 

Major International Treaties: Paraguay is a party to a number of significant treaties, including 

international agreements on biological weapons, chemical weapons, copyright, human rights, 

intellectual property, nuclear weapons non-proliferation, refugees, and torture. In the 

environmental arena, Paraguay is party to the following agreements: Biodiversity, Climate 

Change (including the Kyoto Protocol), Desertification, Endangered Species, Hazardous Wastes, 

Law of the Sea, Ozone Layer Protection, and Wetlands. 

NATIONAL SECURITY 

Armed Forces Overview: Paraguay has a small, sparsely funded military. As of 2005, the 

armed forces totaled 10,010 active-duty personnel, including 1,900 conscripts, and about 

164,500 reserves. Traditionally, the armed forces have focused more on quelling domestic 

uprisings than on protecting Paraguay from international threats. During Stroessner’s

authoritarian regime, the military played an important role in suppressing dissent. 

Foreign Military Relations: Paraguayan armed forces have conducted joint training with the 

United States. In 2005 Paraguay agreed to allow U.S. troops to enter Paraguay for up to 18 

months, ostensibly to monitor the tri-border region of Paraguay, Argentina, and Brazil for 

terrorist operations. U.S. troops will train their Paraguayan counterparts in methods to deter drug 

trafficking, government corruption, and terrorism. Before being granted access by Paraguay, the 

United States had been refused entry rights by both Brazil and Argentina. 

External Threats: Paraguay has no direct external threats. Instead, money laundering, drug 

trafficking, and internal uprisings are the focus of Paraguay’s military forces. 

Defense Budget: Paraguay spent US$53 million on defense in 2004, approximately 1 percent of 

the country’s gross domestic product. 

Major Military Units: Paraguay’s military is composed of an army, navy, air force, and 

paramilitary police force. The army is the largest service with 7,600 personnel, including 1,500 

conscripts. Six military regions cover the country, encompassing three corps headquarters and 

nine division headquarters (six infantry and three cavalry). Principal army units include nine 

infantry regiments, three horse cavalry regiments, three mechanized cavalry regiments, a 

Presidential Guard, 20 frontier detachments, three artillery groups, one air defense artillery 

group, and six engineer battalions. Army reserve forces include 14 infantry and four cavalry 

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regiments. Without coastal access, rivers are the focus of Paraguay’s navy, which has 1,400 

personnel, including 300 conscripts. Naval aviation has 100 personnel. The marines also operate 

as part of the navy, with a force of about 900, including 200 conscripts. The navy has bases in 

Asunción, Bahía Negra, and Ciudad del Este. The air force is the newest and smallest of the 

services, with 1,100 personnel, including 200 conscripts. 

Major Military Equipment: The army has 12 M–4A3 tanks, 43 reconnaissance vehicles, and 

10 armored personnel carriers, as well as more than 40 towed artillery pieces, 80 mortars, one 

LAW rocket launcher, one M–20 recoilless launcher, and 60 air defense guns. The navy 

inventory includes eight patrol craft as well as 20 smaller craft and five support and 

miscellaneous craft. Naval aviation has five planes and three helicopters. Paraguay’s air force 

operates a fleet of 12 combat aircraft, 5 transport planes, 10 liaison aircraft, 12 training aircraft, 

and 11 non-combat helicopters. Additionally, the air force maintains the presidential fleet, which 

consists of a DCH–6 and a Boeing 707. The air force shares another three planes with the army. 

Military Service: Paraguay has compulsory military service for all males 18 years of age, 

consisting of either one year of service in the army or two years in the navy. The 1992 

constitution created conscientious objector status for those opposed to serving in the military. 

Since 1993, 120,000 have been classified as conscientious objectors. Problems with the 

enlistment of soldiers under the age of 18 have led to stricter procedures verifying a recruit’s age. 

In 2003 the national military academy admitted females for the first time. 

Paramilitary Forces: Paraguay’s paramilitary police force is larger than its military, with 

14,800 personnel, including 4,000 conscripts. 

Foreign Military Forces: The United States maintains a presence in Paraguay. Joint training 

and operations are planned, aiming to control the crime-ridden tri-border region of Paraguay, 

Argentina, and Brazil. Neighboring countries, including Argentina, Bolivia, and Brazil, have 

objected to Paraguay’s military partnership with the United States. 

Military Forces Abroad: Paraguay has only a nominal military presence outside its own 

borders. In 2004 Paraguay sent 43 military observers to United Nations missions in Côte 

d’Ivoire, the Democratic Republic of Congo, Ethiopia/Eritrea, Haiti, and Liberia. 

Police: Paraguay’s main police force, the National Police, has long operated under the authority 

of the minister of interior. It has been underfunded and undertrained. Corruption has been rife. 

Reports have indicated that National Police officers were involved in drug-trafficking and 

kidnapping rings. The Penal and Criminal Procedures Code of 2000 worked to eliminate some of 

this corruption, but, despite a massive reorganization, widespread corruption persists. 

Internal Threats: Violent internal dissent represents a far more dangerous threat to Paraguayan 

progress than does any external threat. Suggestions by the Colorado Party that it might favor 

amending the constitution in order to allow President Duarte to run for a second term in 2008 

demonstrate the vulnerability of the 1992 constitution⎯despite the many improvements it 

brought to the country. Paraguay’s legacy of authoritarian government and violent politics has 

not been completely erased. In 2004 the daughter of a former president was kidnapped and 

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Library of Congress – Federal Research Division Country Profile: Paraguay, October 2005 

killed, apparently by a radical leftist political group. Corruption in politics and the financial 

sector have resulted in declining popular trust of the government. President Duarte has made 

significant economic improvements, but economic and political polarization continues. Crime, 

including money laundering and the drug trade, must be brought under control to foster longterm, widespread economic growth. Like most South American countries, Paraguay also faces 

tensions between its indigenous population and those seeking liberalization of the society and 

economy. 

Terrorism: Paraguay has been an active participant in the war against terrorism, backing 

counterterrorism initiatives by the United Nations and Organization of American States. 

Paraguay has commenced joint counterterrorism training with the United States. There is no 

evidence of terrorist activity or training in Paraguay, although the tri-border region continues to 

be a concern. The legislature has been slow to act in passing counterterrorism legislation sought 

by the administration. However, Paraguay has actively prosecuted terrorist fundraisers under 

present law. In 2004 a Hizballah fundraiser was convicted of tax evasion in Paraguay following 

his extradition from Brazil. 

Human Rights: Paraguay meets most international standards for human rights. It affords its 

citizens the rights of freedom of the press, speech, and religion. Those suspected of committing 

crimes must have charges brought against them within 180 days, or have the charges dropped. 

All suspects have the right to a lawyer. However, prison conditions in Paraguay are abysmal. 

Asunción’s largest prison holds three times the number of prisoners for which it was designed. 

Moreover, it has only 120 guards for more than 2,500 prisoners. Prisoners are malnourished and 

often kept in unsafe and unsanitary conditions. 

The constitution guarantees the right of privacy and the protection of private property. However, 

the National Police have been accused of violating these rights at times. Additionally, the police 

have been accused of using torture to solicit information from suspects. Demonstrations of 

protest are permitted but are restricted to certain places and times in Asunción. Paraguayan 

workers have the right to unionize, protest, and strike. Nevertheless, the International Labour 

Organization has criticized Paraguay’s workers’ rights for various deficiencies, including 

required registration of unions, the 300-worker minimum to form a union, and the lack of 

measures to prevent anti-union discrimination. Union members in Paraguay have complained of 

their leaders being fired or suffering discrimination. 

Violations of women’s rights have occurred most frequently in situations of sexual and domestic 

abuse. Spousal abuse is common and underreported, but it is a crime in Paraguay only if deemed 

habitual. Abuse and sexual abuse of children also are problems. The passage of the Child and 

Adolescent Law in 2001 required that departmental agencies be created to monitor and protect 

children’s rights, but so far the effect has been minimal. Trafficking in women and children from

Paraguay remains a serious problem. In April 2004, Spanish police discovered 28 Paraguayan 

women trafficked to Spain for prostitution. Paraguay’s penal code outlaws trafficking of persons, 

but there have been no reported prosecutions of suspected traffickers. 

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