Paraguay

By Lucinda Elliott of LatAm Confidential

Commodity prices may be weaker but South American food producers still enjoy formidable comparative advantages. Foreign investors seeking to benefit from the enormous pick up in Chinese demand for agricultural commodities grown in Latin America have however had a fairly complicated time.

A 2010 law limits direct foreign ownership of land in Brazil. Tax and foreign constraints limit the profitability of farming in Argentina and listed agribusiness stocks are few and far between, making it hard for investors to buy into the sector in the region’s agriculture powerhouses. Read more

By Samuel George of the Bertelsmann Foundation

When the presidents of Chile, Colombia, Mexico and Peru meet on June 19 and 20 for the ninth Pacific Alliance summit in Nayarit, Mexico, they’ll likely debate a proposal that could transform their quietly successful pact while boosting Latin American unity.

At the urging of Chile’s Michelle Bachelet, the gathering is expected to broach the potential integration of the Alliance, which was formed among the four countries in 2012, and Mercosur, an older grouping that includes the regional heavyweights of Brazil and Argentina. The issue would represent a crossroads for the Alliance, however, since Mercosur does not generally share the enthusiasm for international trade shown by its neighbours on the Pacific coast. Read more

Only last week, Horacio Cartes, Paraguay’s new president, was waxing lyrical about his country’s ability to grow at 7 or 8 per cent a year “on a permanent basis”.

At the time he said that this would be achieved by raising investment levels, especially in infrastructure and agriculture – but it looks like there may be a bit more to it than that.

On Monday, the government said it didn’t have enough money to pay all public servants, which account for about 4 per cent of the country’s 6.6m inhabitants. Read more

Paraguay’s new president, the tobacco magnate Horacio Cartes, admits to having an “obsession”: his country’s economic growth rates.

Certainly, they are impressive. Paraguay’s double-digit growth this year will make it one of the fastest expanding economies in the world. Read more

Paraguay’s economy is on fire. Gross domestic product surged by a jaw-dropping 14.8 per cent in the first quarter, compared with the same period last year.

There is, mind you, more to that than meets the eye – as becomes apparent when you spy the quarter-on-quarter numbers (a rise of 8.8 per cent in the first quarter this year compared with the fourth quarter last year). Read more

Seek and ye shall find … even if it is not what you were looking for.

That, at least, is what has happened to US-Chilean company, Darmatal, in Paraguay. As interest increases in Paraguay’s hydrocarbons potential, Darmatal was exploring for oil. Instead, it found ironRead more

Judging from Thursday’s successful Paraguayan bond sale, bond investors are clearly more desperate to find a good return somewhere – anywhere – then they are interested in constitutional niceties.

Paraguay agreed to sell $500m in bonds at 4.625 per cent, at the bottom of the guidelines of 4.625 per cent to 4.75 percent and far below earlier talk of 5 per cent, Reuters reported. Even more impressively, Paraguay came in under its neighbor Bolivia, which sold $500m in bonds in October at 4.875 per cent. Read more

By Germán Ruiz Aveiro of the Rural Association of Paraguay

There are no social problems with soy plantations in Paraguay. There is only a small group of NGOs that fantasize about the issue without any national repercussions.

Soybean plantings occupy approximately 2.95m of Paraguay’s 40m hectares. Wheat, corn, canola and oats are rotated in for the second harvest. This allows Paraguay not only to be the world’s fourth largest soy exporter, but also the eighth largest beef exporter, 10th in wheat, and 11th in corn. More than 50 per cent of our country’s farmers cultivate less than 50 hectares. Read more

By Natalia Alonso of Oxfam

Recent events in Paraguay put a spotlight on soy and the oceans of land it occupies. President Fernando Lugo’s election promise to redistribute land and carry out agrarian reform was popular but ultimately unachievable in the face of the powerful landowners that opposed him. A few weeks ago, 11 farmers and six police officers were killed during an operation to evict squatters from a huge farm used by a large-scale land owner and opponent of Lugo. Using this as a pretext, the Senate impeached Lugo eight days later.

Land has become an increasingly contentious issue and EU biofuels policies make us inextricably linked to the story. Read more

By Jude Webber and Joe Leahy

Federico Franco, Paraguay’s new president who was installed after what regional neighbours have scorned as a legally flawed impeachment process, “has the opportunity to be a Paraguayan Cincinnatus”. So says Manuel Ferreira, the newly appointed finance minister (and ancient history buff).

Cincinnatus, though, was a Roman dictator – possibly not the title Franco would like to be remembered by, especially after he came to power in what has been slammed in Buenos Aires and some capitals as a new-style coup d’état. Read more

So, four weeks from now Venezuela will become a full member of Mercosur, the dysfunctional trade block set up in 1991 by Argentina, Brazil, Paraguay and Uruguay. The enlargement, however, looks like a stitch-up. Venezuela is getting in now only because Paraguay was “suspended” from the block after its dubious regime change last month. Paraguay’s congress had refused to ratify Venezuelan entry for the past six years.

But if Caracas thinks it has snatched legitimisation from the jaws of ostracism, it should think again. Mercosur is a club where the big boys bend the rules and Venezuela will soon find out what free trade with Argentina and Brazil is all about. Read more

It sounds good – an emerging powers’ pact in the form of free-trade deal between China and members of the South American cutsoms’ union, Mercosur – some of whom are already big trading partners. But will it happen?

Well, China this week did dish out the promise of a $10bn credit line to Latin America for infrastructure projects, as well as hope aloud about the Mercosur pact. Read more

Banco Continental Paraguay’s $200m bond sale is the first tangible casualty of the spillover of Paraguay’s political crisis into the investment community. The bank scrapped the sale – but unusually on the day the deal was due to settle. Now it has to pay investors back.

The bank issued the bond two days before the ousting of Fernando Lugo as president in a ligtning impeachment trial. The former priest slammed his removal as an “institutional coup”, and he rallied Paraguayans to oppose the new administration through peaceful means. Read more

It sounds ominous when the company planning one of the biggest investments in a country’s history says it is watching developments closely.

But here is what Rio Tinto Alcan has said about the impact of Paraguay’s unfolding political crisis on its plans to build a $4bn aluminium smelter. Read more

What is going on in Paraguay? An ineffectual president stands to be swept from office in record time by a majority vote on Friday, impeached on the highly woolly charge of “poor fulfilment of duties”, while the region furrows its brow.

The regional diplomatic bloc, the Union of South American Nations, may seek to apply sanctions to Paraguay under its so-called democratic clause, if Fernando Lugo is ousted. Read more