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INTERtrATION.t11 BANK FOR BECONSTIDCTIOrf AITD DEV..:;rOPMENT ____ --"_._-..... ........ t t • ___." .~-
~RT ON THE ECOHCMY OF PARAGUAY ~ 1.. _ ..
ECONOJ.'1H C DEl? .AJ.TtVJENT Prep:-red by: Newton B • .Pl::rker
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TABLE OF C019TTS
Basic Statistics 0 • 0 • ., . . . . · . . .', . . ~. . . .. . Summary and Conclusions · . . .. '. . .'.. . . ,. . . .. . . .
I~. Paraoouayl s Basic Problems · . . . .. " ... . . " . . . . . II.. Land, People and Politics •• • • • • •. ,'. • ~ • • •.•.•
1. The Lan.d • • • • , . " • • .'. .'... . .. • • • • 2. The people ,. • • • • .'. • • • • • • • • • • .... • 3. History and Politics • • • • • • •.• • • • • • • •
III. National Income and Occupational Distribution • I • • • •
IV. Shor! ·Run Limiting Factors • • • • • • • .. • • • · • • • • L Labor SUpply Availabilities .. • • • • · ~ • • 0 • • 2. Tram~'Portat iOll • 0 • • • • • • • • • • • • • • · • a: FUel and Power Availabilities • • • • • • • • · .. · Land Distribution and Use ~ · • • c • 0 • • • · • • 5. Government Interposition in the Economy • • • • • •
v. Structure of Production o • • • • • • 0 • • .. • .. .. • • •
l. Agriculture • • • • ~ • " • • • • ~ • • , • • • ~ • 2. Stockraising It • · • • • · • • • • • • • • , • • •
~: Lumbering • • .. " • • • • • 0 • · · • • · • · • · • Minerals . • • • • • • • • ! • • • • • • · • • ,; • 5. Construction .. • • • • · · • • • · • • • · • I 0 • 6. Indastry and Commerce • • .. • .. · • • • • .. • .. •
Internal Finance I • • • • , • .. .. • • • • !It • • .. • ~ • •
l. Mone:: and Prices · 0 · · · · • • 0 · • • 0 • 2. Public Fj,nance • • 0 · • • • · • • • • • • • • 0 •
~: Intelnal Iabt · • • • 0 · * · • · • · • • · 0
Capital Formation • •. 0 0 • • • • • • • • • · • • •
VII. International Relations .' 0 • • • · • • .. 0 .. · • • • • • 1. Foreign Excr.aTlge Controls and :ilixchange Boldir.gs • • 2w FOleign Trade ') .. • .. • • o' • • .. 0 • • · • • · · o·
3. Bclance of Payments , .. .. .. o· • • .' • 0- • O. .. • • • 4. Foreign Investment • .' '" 0 • o' 0 0 I' .. 0, 0 • • j:; Foreign Debt Record • 0 o' 0 0' o· 0 .. · • • 0 0 • .I" e ,
Maps reproduced in this report were prepared by: United States Tariff Commission (map opposite page ii) Ministry of limnomy, Asuncion (map opposite page 11) Inter-American Technical Cooperative Service, Ministry
of Agriculture, Asuncion (maps opposite pages 18 and 23)
Page
i
ii
1
3 3 7;
'" 5
7
9 " .I
10 12 ' , .J..
15
17 17 20 21 23 23 25
29 x:: -.,.;
33 36 37
39 39 41 45 52 52
BASIC STATISTICS
Area:
Population:
Currency: Unit: Parity:
Official Exchange Transactions, on Acco'Wlt of:
Imports 1946: Exports 194b:
Nat ional Income in 19t~6:
:Budget in 1948: 1l0rdinaryll Revenues: "prdinaryfl Expenditures:
Internal Debt of Natior~l Government (AugJ.st, 1948):
External Debt;
Monetary Supply: Iecember 1940: fucember I9l46: Jiii:ieJ..948:
Wnol~cale Prices (A~~iont: December 1940~ fucember 19trr: June 1948:
Net Exchange Reserves: Iecember 1940~ December 1946; December 1947: Ju..'le 1948: September 1948~
-1-
160,000 square mileR
1.2 - 1.4 million
gnare.ni 3.09 guaranies ... 1 dollar
U,S. $26.2 million U, S. $2<] .. 7 millior.L
u.s. $150 willion
U.S. $15.5 million U.S. $20~1 million
U.S. $1406 million
U.S. $28.6 million
U.S. $4.8 million U.S. $2J. r l million U.S, $26.6 million
100 308 382 (estimate)
u.S. $0.2 million U.S. $ll.~ million U.S, $7.7 million U.S. $7.8 million U,S, $3.4 million
t,z"
.,"
B o 1 I v I A
2f,"
-<P
~
-l'
te' + + ./
t,z. 60"
PARAGUAY ELEVATIONS
IIICTIR$ 1"£1:1'
PHYSICAL MAP
'~E 01' NILES 0 .. 100 110 &00
SCALE 01' KILOIIIIIETDII o iO 100 iio IMPORTANT CITIES AND TOWNS ....... 0 RAILROADS ..•. " ..................... I I I I I I , I
:~;:~E$·· ...... :::::::· .. :·.·.·.· .. · .... :·.::::.~ o
'" "
\ + \
/ I
/ r\
I I::x1
/ l
"
+ -1}1
, .. ~
16"
","
'iI>'
'7
-2
/
.{ 22'
....
+ ~
54'
SUlvJ.MARY Aim CONCLUSIONS
1..,.. Geography, D3mograpby and P.oli ttcs
Para.::,ouay is a potentially productive agricultural country,
landlocked between Argentina, Brazil and Bolivia" Access to the sea is
by w~ of about 900 miles of waterways controlled by Argentina. The
bu.1.k of agriculture, industry and population is concentrated around
Asuncion, tho capital. The count:':'Y as a whole is sparsely populated.
Demogl"aphically t the Paregllayan people is one of the most
homogeneous in Sou.th America. The Paraguayan worker is quick to learn.
and when properly nourished is considered to be an effective and
dependable workwano
Poli tically, Paragu,a,.v' s r..istory for the last 80 years has
been c:b..aracterized by chronic instability, largely attributable to
foreign wars in 1865-1870 and 1932-1935. The present Government (inaugu
rated on August 15, 1948) t came to power after a major civil v:ar in
1947. It represents a potentiallY decisive political reorientationo
2. Natl+re of the Econorpy
Paraguay I s economic develo:9llJent has been conditioned. by
(a) the economic, social and political disruption consequent upon its
war experiences; (b) its geograpr..ical isolation; (c) \L~solved diffi
culties of transportation; (d) exte::lsive coverage of hard-wood timber
stands, which make land clearance diffi cult; (e) lack of metals and
mineral power sources; (;f) smallness of the irrtern;;u market and a parti
cular relationship to Argentinao
- 11 -
National income in 1946 was officially estimated at equiva
lent to US$15O million, of which 38 per cent arose in in~stry and coo
merce and 33 per cent in agriculture and stockrai sing" However, i.d th C ')
or more per cent of the workin5 population engaged in agriculture, Par~
gu.a:y is basically an agricul tura2. economy.
Major agricultural crops are corn, cassava, peanuts, .... iC8,
cotton, sugfl,r and tobacco, the three latter for ex.;?ort. I,lt?jor ;..'orest
products arc hardrood logs, quebracho and petit-grain, all mainly for
export. Almost one-half of meut Froduction is for export, to the
United Sta;~.~s and the United Kingdom as canned meat products, Hides
are mostly exported. Since 1938 there has been substa~tial increase in
volume of agricultural and lw:.ltering production, but cattle production
has apparently not fully recovered fr.om €I series of droughts in the
early 19401 s.
"Industry" comprises the processing of food products, textiles,
forest products, simple construction materials and hiles.. About 5+ per
cent of lIindustrial" production is for export.. Cement is not produced,
nor metal product s. Production of leather and 1'!ood products is crude
and on a meager scale. With the exception of the ~eat packin~, sugar,
quebracho and textile industries, processing is carried out by sr:;alJ,.
units~ Only in Asuncion is there any considerable use of electricity.
The present Government has embarked upon an ambitions pro
gram to extend and intensify agriculturci production, and as a means to
this end, to extend the road net'.:l1ork. It hopes to supplement this pro
gram by large-scale immigrat ion.
- iii ...
3. Internal Finance
Money supply, pl'ices (in Asuncion) and wages (in Asur.l.cion)
increased about 450 per cent, 300 per cent and 200 per cent respectiv61~',
between 1940 and June 1948. Interest rates vary from 6 per cent to 12
per cent, de facto profit rates from 15 per cent to 50 per cent.
Central Bank: credit (representing aoout 70 per cent of to:'el
credi t outstantting, both to the public rod more especially to the Govern-
ment, has incr~e,sed rapidly in the last t1'JO years. Such credii to the
Government has been the largest source of increase in tLe n;,oney supply
since 1940 ..
Government fina.Tlces have sho~ annual defici'~s since 1933
(except in 19)+5). The present governmental development prograrn sug-
gests trie possibility of continued defi.~it financinE; over tile next
several years. Tne internbl debt, at August 30, 19l :8, totalled the
equi valent of Us.p 15 million"
fumestic inv'estment is small, owing to low inco';1es, the
absence of saving habits, and the e,xpatriation of dOi1estic ~rofits.
4. Inte":'Ilational Economic and Financial Relations
Official balance of payll1ents esti:nates (85 per cent cov61age)
indicate that from the end of 1940 to June, 1948 Paraguay bad a net ove:..~-
all favorable balance equiv31ent to US$ 10.5 million. This over-all
balance reflected combined favorable bel;:mces on account 0:' trade, pri-
vatecapital and Government credit operations, end an unfavorable balance
on non-trade current account. It included Go-vernment borro""ings eq""liva-
lent to about US$ 13 million and United States Goverl1ment grants and
gifts of about uS$ 6 million.
.... iv ...
liUture exchange receipts from exports appear goOd.. Ceteri s
paribus, private capital receipts v.rill continue to exceed payments. Ex
change payments for foreign debt service are increasing, but ether cur
rent payments al'e being subjected to increasing restrictions. Thus, t_~e
balancing item is imports, especil:llly Government capital-formation irr.ports,
The pressure of these demands upon exchange availabilities, added. tJ
increasing dE:::mands for private conS1.llaption imports, is expected !lot only
to necessitate the indefinite retention of excbange contl'ols» out to c~se
a diminut:ion of present exchange reserves.
Foreign trade is estimated to have shoV'lIl a net favorable
balance e~uivalent to ~S$ 506 million between Jecember 1940 and June 1948.
Up to the end of 1947 the terms of trade, on the brlsis of pre13ent .1fltr:t~
had apparently moved against Paraguay; since then they lliay have cear.ed
to do so. l\<lajor exports, by value in 191..~6, were meat products, cotton,
quebracho, logs and hides and skins. The major expo.i:'t lflarkets Vliers
IIArgentina in trensi tilt Argentina and the TJni ted Kinbdom. Major import
markets were Argentina, United States and Brazil. Paraguay traditiona1:;'y
has a trade surplus with tr.e Uni ted Kingdom, and trade deficits 1?ith
Argentina, the United States and Brazil.
A very important element in Farag'..lay's foreign trade situaho::l
is the means of transportation between Asuncion and the seao This is
controlled by an Argentine monopoly. Fre~t~osts have more than
doubled since 1946, and could be a factor in pricing ParaguaJl' out of
some export markets.
Gro ss gold and exchange reserves between Decembel' 1940 9.!."1.d
June 1948 increased from the equivalent of US$ 0.5 million to US$ 11.4
-v--
million t falling by September 194-8 to uS$ g million. Liabilities rose
from US$ 0.3 million in 1940 to uS$ 3.6 million at June 1948 and US$ 4.6
million at September. The decrease in gross holdings in 1948 was olving
largely to imports from the United States for developmental purposes; t':Le
increase in liabilities reflected te>..-tile imports from Brazil, on virtucl cred.it.
Exchange controls have been in effect in Paraguay since 1941.
There are three exchange rates, all officially controlled. Paraguay can
not afford to give up exchange controls as long as the dollar shortage
continues in Argentina.
A uad foreign debt record of lo~ stanjing ~as reversed between
1941 and 1944, since which time debt service has been remitted regularly.
The present Government indicates intentions of observing scrupulously
its foreign debt obligations. The foreign debt currently totals the
e,uivalent of about US$ 29 million.
Devaluation is not expected while the present seller I s market
for Paraguay's major export products continues, unless the exchange con
trol machinery breaks dO~Jn under the pressure cr~nted by the Government Is
capital-formation program.
5. Conclusions
(a) Paraguay has resources to maintain a larger population at
a higher standard of living. Unfortunately, Paraguay has acquired a
political pattern ?hichhas not provided an attractive economic etmos
p~ere either to domestic or foreign capital, though there exist
apparently good investment opportunities.
(b) At present. the country is, so to speak,. on "dead center ll •
- vi ...
To get off, it needs as a first step increased agricultural production,
which in turn, as an instrument t requires roads. Bath require capi tal
which is nat of the vent,ure type, and which Paraguay does not ha7e, but
the application of which might help stabilize the political situatior.,
and might break the way for inves'Lment opportu;li ties which. WQ111d attl'8ct
venture capital, bath in the farm of industri!3l inv9stmer:t B.nd illJIT:igra
tion.
(C) On the periphery of this basic situation, there are
several points at "Th.ich specific action ~"o'J.ld. benefit the balar.ce of pay
ments problem. and thus presumably afJ.d indirectly, tae above major prob
lem. Such possibilities group themssl ves around four heads: (a) means
to reduce shjppj.ng casts to Buenos Aires; (b) means to increase domes
tic processillg of Paraguay's exportable surpluses (e,g., timber, qae
bracho, hides and fruits) in order to reduce bulk, enhance export values,
ald extend present marketsj (c) means to reduce imports by t.i~e estab
lishment or extension of simple industrial processes using domestic
resources (e.g., production of cement, d&ir;y- products, shoes, waoo. pro
ducts); (d) means to widen direct contacts with overseas markets in
order to reduce economic £l.nd monetary dependence upon Argentina, and to
acquaint foreign buyers with Paragua.van products.
(d) The internal fina1'loe and balr--rlce of payments situations
are potentially precarious, but if the ?aragu~7an authorities are ca1'e
ful, they should be able to avoid violent inflatiol'1 t fOj,~eign debt
default (even if the debt were somewhat larger) and Milateral ievalua.
tio.n. Under present conditions, this, hm'Tever, will be aChieved at the
expense of reducing their current level of developmental imports and
ambitions. - vii -
I. PARAGUAY'S B .. 'U3IC PROBLEMS
.Althou~ .Par80~y r.as been endo~ed by nature mth~he stuff of
which coIilfort, if not w€elth, could be made, it has today probably the
smallest popula.tion and national income in Sou.th America, and the third
smallest per capita income. Paraguay's present situation is the product
of a complex of causal forces ,l!J'hich are so mutually inter.,.de,en.dent that
it 1s not easy to disentangle them in order of priority. Somevinat arbi
trarily, thE; ~eforet they will be treated in the follo'''ir+g order: (1) poli
tical instability, (2) geographical loca.tion, (3) nature of resou.rces~
(1) The phrase "political instability", in ref arence to Pars€:,u8Y,
as in reference to many other parts of Latin Allierica, has been called a
misnomer, since in fact, historically it has been a norm rather than a
deviation therefroIDQ In the case of Pal'egu~t it is inseperably asso
ciated ,,'!J1. th the political t economic and social destruction and di sorgani
~ation caused by a supremely di sastrous war in 1865, recovery frolll which
was arrested in 1932 by the outbreak of the Oh8.CO War. For the most part,
in Paraguay th;i, s instability has taken the form of a long series of palace
revolutions, punctuated by occasional major civil wars such as that of
19l.q. This instability in the past has creeted an atmosphere of insecuI'i ty
which has hampered production, has inhibited the potential infloV! of
private investment and has led to fli~~t of profits. There is reason to
hope that the present Gover~ent represents a decisive turning point in
this respect.
-1-
-2-
(2) ParBeq].ay's land-loc;,.ced. location has kep".; it, ~n the one
hand, from easy access to international marke'us ani international commer
cial acquaintance, 811.d on the other hand, from access to interne.tiO'1[,J,
political, economic and social ideas. Ecor.omically, this isol~ion has
tended to exclude Paraguay from the influences of international competi
tion v.hich have been extended (~.'ith all the recognized litlitations) to
more accessible countries. It bas eJ...'PQsed Paragu.a.y, under conditions in
which the internat ior..el competi t i ve element '.'ras lacking, to e:xploi tat ion
by nationals of its neighbors by forcinE: it to trade with tile world largely
through intermediaries; and it has made the costs of intemational COI.l
mercic~ intercourse unduly high.
(3) Paraguay! s peculiar co:nbination of natu:::-al resources has
undoubtedly been a factor ir~ its belated devel0:9I..ient; (a) a terrain
largely covered. llIJi th hard v,'ood forests, 'I';hich even fol' agricultu.ral
development requires metal tools; (b) El lacic of easily available metals
for the domestic production of tools; and (c) a lack of exportable commo
dities for ".J11ich foreign demand has been strong, with the proceeds from
which the needed tools and equipm~nt could be acquired. ~rds combination
of cirCUli1s'~ances has had the effect of retarding land-clearing and 1'000-
construction operations; of restricting economic intercQurse; and of
sustaining an unb~anced structure of landholdings. These conditions.
in turn, have acted to hold down production and perpetuate a chronic
state of poverty that makes for undernourishment, i~li teracy J lack of
initiative, and political discon.tent.
-3-
II. LAUD, PEOPLE A.:rD POLITICS
1. The Land
l?arag~ is one of the tw,o land-locked countries in Sou~h .o\merica,
si tuated about 900 miles inland from the Atlantic Ocean along the La,
l?lata-Parana-Paraguay river system. It bas an area of about 160,000 sqlaXe
miles, appro~.mately equivalent to the SUIll of the areas of Hew England,
New York, New Jersey and Pennsylvania. ThrOl1gh it, nOl'th and south, runs
the Paraguay River. The area east of the River, comprising about 60,000
square miles. is what generally is meant by the name Para£"J.aY. From an
altitude of about 2,000 feet at the eastern bo~~dary it slopes gradually
to the level of the River. Hills and run..'1ing watel' are abu.'1o.ant through
out the area. The high country to the east is heavily TIooded with Virgin
hard-wood timber. In general, this part of Paraguay is fertile, ·.7ith s.
climate resembling that of Florida. The region as a whole contains
minerals of which. little more than their existence is kn01.m. Inclu.d.ed in
this portiun of Paraguay is more than 90 per cent of the population and
practically all of the country's industry and commerce.
The area west of the River, known as the Chaco, is flDt and
covered v.1th plains grass and scrub forest. This region is vinually
Q'1populated; in general, its economic activity consists of cattle-raising
and the cutting of quebracho. At present it is ceing explored for oil by
the Union Oil COl~any of California.
2. The People
Racially the Paraguayan people are descended from the mixture
-4-
of Spanish conquerors and indigeno'ls Guarani Indians. As a reevlt of
enforced polyg~ follo~ng a catastrophic war from 1865 to 1870. the
Paraguayan population is today racially one of the most homogeneous in
Latin America, ~d socially probably the west homogeneous. The apparent
almost complete lack of hereditary social or racial distinction among
economic groups is striking.
In general, the population is unlettered, undernourished and
subject to the diseases, social e,s vre1l as ph:rsical, associated with
extreme poverty. Nonetheless, the Paraguay~ is quick to learn ev-en co;n
plicated mechanical processes, is an efficient and fairly energetic
worker when properly nourished., ana is exceptionally honest in his per
sonal dealings.
The population is estimated between 1,200,000 and 1 r 4co t ooo,
about 75 per cent of whom live wi thin a. hundred-mile radius of Asuncion,
the capital. Asuncion has a population of probably 200,000 to 250,000.
Immigratiol!
'l't.e official estimate for immigrant entries from 1904 to 1948
is about 30,000. However, this figure probably- represents or-J.y- aoout
per cent of actual entries. Moreover, this is a gross figure, not includ
ing emigrants, political or otherwise, who presently total between 50.000
~~d 100,000, largely as a result of the Civil War of 1947.
No breakdov'n of lmmig:re.nts by nationality is available, but in
recent years the largest parts probably have been Polish, Canadian and
Russian Mennonites who, in a total of more than 8,000, have settled in
cc,lonies in the Chaco and central Eastern Paraguay. The Merui.oni tes, for
.... 5-
reasons of their training, initiative, abstention from politics, ar.d
financial backing, are considered highly desirable as immigrents.
Increased immigration is one of the three major segments of tha
present Government I s development aspirations, the others being agricul
ture and roads. The Government ~,l()uld like to envisage a program involving
up to 20,000 agricultural immigrants a year for five years, but it is
widely admitted that such a program presents probably too ambi tiou.s a sche
dule of administ rati ve !J.al1o.liIlg and assimilation, and capital outlay.
3. Eistorl end Folitics
Asuncion was settled by the Spanish in 1537 and is the oldest
permanent settlement in the Plata basin. During the coloni~ period
Paraguay was a flourishing Jesuit Mission Colony. Foll()'!'ling the forced
abdication of the Spanish monarchy in 1808, Paraguayan independence vias
declared in 1811. Under the rule of dictators Jose Gaspar Rodriguez de
Francia, Carlos Antonio Lopez and Francisco Solano Lopez (1814-1870),
Paraeuay underwent a greater degree of social stabili~y and economic
prosperity than most other Latin American countries, though at the
expense of relatively complete isolation from the rest of t~e 1'!orld and.
the stifling of self-expression.
In 1865 this period was ended by a war (1865-1870) against
Argentina, Brazil and Uruguay in which practically all of the male popu
lation of ParAguay perished and much accUlID.llated weelth vIas destroyed.
From the chaos caused by this catastrophe Paraguay has never recovered
economically, demographically, nor in terms of political evolution, In
1932, after 60 years of political disordisr,. Paraguay was embroiled in a new
~6-
war (1932-1935) with Bali via, over '~he Chaco area separat lng the two coun
tries.. Although Para~ won the war and most of the territory under dis ...
pute. it was at the cost of manpower alld capital resourCf1S which repre
sented a further lien upon the future, and resulted in excessive currelJ,C;'
issues t inflation and drastic depreciation of the currency.
Following the Chaco War a series of military coups dt eta1i culmi
nated in the dictatorship of Higinio Morinigo (1940-1948) which IJroall.ced
numerous desirable reforms, among them the incbl.si?n in the cabine'!:. of mem
bers of the opposition (Colorado) party, which had been out of power since
1904.. This J.Zl turn caused a revolt of the incumbent (Libel'al) party in
March 1947 that developed into a costly Civil :,'jar in which the Liberals
were defeated and proscribed. There2Jter the Colorado party obt~ined the
election of the present President, Juan Natelicio Gonzalez o On August 15,
1948 Gonzalez assumed power without further disturbance. The legislatul'e
was called into session, and indications are that Gonzalez will try to
run his Government by constitutional methods. None~heless. since
Au~st 15 he has apparently already had to resist several efforts on the
part of those who ~ him to povrer to assume control of his actions.
The present constitution, which dates froJl 1940, gives most of
the power of Government to the Presi~ent. It provides for an elected
House of Representatives and a (largely ex officla) COlIDCll of State, cut
these bodies are essentially a<ivisory. The right of legislative initia
tive, the control of size and allocation of budgetary expenditures, and
the power of establishing a state of siege when he finds it necessary,
are lodged in the President, who is elected for a five-year term. In
respect of the relation of the State to the indi yiduel and foreigners, the
Constitution follows the general ~ccial security and nationalistic tenden
cies of the time.
-7-
Ill. NATIOliJ'AL INCOME .AND OCCUPA'rIOHAL DIS!!:'BIBUTIOU
The tables presented below (for purposes of COmpari!}n) show the
official breakdown of the national income in 1946 by sources,'· and the
distribution of population by occupations according to data of 1942-1944:
National Income Breal;::dot;m b 1,000,000 guaranies
=. ~,!!,,",' .=!P_~-!::~=·-·~· ==·'=·="~.=Li'1':5il::i':. ==========:-:==::::' =.::::--:::::~=-==:::..:-=-= -~-Source Amount Per Cent
.Agricul ture Stockraising Lumbering (inclusive of quebracho & petit grain) Transport ~~d Communications Manufact.uring and Processing Commerce Banks and Insurance Professional Services Services of Urban Real Estate Federal Government Services Municipal Services Total
Source: Central Bank of Paraguay
85.7 64.3 25,,8 34 .. 8
113.0 55.0 5.5
20.0 10,,0 34.0 4.0
Po~.ation Distribution by Occupations (Estimated)
Class of Occupation
Agriculture Stoclu-ai sing Lumbering Transportation Industry and Commerce Government Unegl0yed (pare~an Labor)
(1 Within the Country 10,000 (2 Outside tlJ.e Country 25,000
Total
Source: Central Bank of Paraguay
Laborers
200,000 10,000 15,000
5,000 65,000 29,000
35,000
25~,OOO
19.0 14.2 5.7 7.7
26.0 12.2 1.1 4.4 202 7.5 0,9
Pel" . ('.ent .
55.7 2 .. 8 4.2 1 .. 4
18,1 8.1
2.8 7.0
100.;1
Y The data on which this table was base<;l suggest that it should more properly be called gross national product.
!J One dollar ~ 3.09 ~aranies, at par.
-8-
Many of the data in both the tables above rely heavily on esti
mates, though in the case of the national income the methodology applj.ed
to the data is in the best modern tradition; both tables should
therefore be taken more as indications of relative magnitudes than as
precise measurements~
Analysis of the above tables indicates (1) that although t:-~e
so-celled labor force is estimated at about 27 per cent of the ropula
tion. it is, in fact, because of the basically agricul t"..u-al and U,.11develofed
nature of t:te economy, very much larger tr...an that; (2) that u..nenr~lo~~ment
("JIrithin the country) ie estimated at less than 1 per cent of the popula
tion; (3) that agriculture accounts for about 56 per cent of the so
called labor force and about 19 per cent of national income; (4) that
industry and COllllIe rce account for 18 per cent of the labor force ar.d 38
per cent of national income; (5) that, per unit of labor force, cattle
raising is perhaps the most productive major occupution in Paraguay (with
the probable exception of the import business). The proportion (cer
tainly) of employment and (probably) of national income reI)resented. by
Government Servic€3 is higr.i.8r now tr...an it was in 1946. It may further
be noted that of the heads of agricultural families about 15 per cent
are women, reflecting the persistence of the results of the war of 1865-
1870.
Any effort to reach an estimate of national income in 1948 on
the basis of the 1946 data is confounded by the fact that as a result of
civil war in 1947 and drought in 1948, there has been indeterminate and
uneven decrease in production; accompanied by considerable rises in prices
and wages. It would seem probable that real national income has not fallen
very much. if a..1'lY, while money 1ncome has increased appreciably even on a
per capita basis.
-9-
IV. SHORT-ruN LllviITIlTG FACTORS , ,
1. ~abor Supplr Availabilities
Although it would appeal", from the figures presented earlier in
connection with population distribution, that Para@~ is verging upon a
shortage of labor, there are reasons for believing that this situation is
less stringer4t than at first appears. As already pointed out, there it:) a
heavy cOilcentration of rural populE>.tion aroUnd Asuncion. This population
is probably increasing more rapidly than it is being absorbed by the
cities, whereas, as a result chiefly of diffi culties of cOl11l!IU!lication and
land clearance, there is no apparent tendency on the part of this popula
tion to establish a pattern of ~onta~eous colonization outside its pre
sent boundaries. As the population grows inside this nucleus a situation
bordering on concealed unemployment may be dev&loped there ..
It will thus become increasingly possible to withdraw labor
supply from this nucleus for agricultural or industrial production (or
both) elsewhere, without deteriorating the productive conditions within
the nucleus itself. This possibility will be enhan~ed in proportion as
agricultural methods within the nucleus are improved, as exiles return
to Paraguay- from abroad and as the a-"I"J:Ued forces are reduced, Therefore,
it is presumed that there will be available sufficient domestic labor
supply to meet Paraguay I s probable needs in the near future,
Immigration
By the same token it appears that imrnigration is not presently
a sine qua non of development in Paraguay in the short :run.
-10 -
However, any effort to extand agricultural production rapidly
will involve eitheriomestic pov~ntion ~ov~me~ts or immigration. In
either .. case a progrrJU of rOEd building ,IDd IDllcl clearing will be neces-
sary.. Thi s s1 tuation rai ses the question ~~hether the ecor-ornie advan-
tages favoring domestic colonization (lower initial cost, habit'l&tion to
local conditions, etc.) are greater than those to be derived from imnrl.
gration (greater ene rg;r , initiative and IIknow-how", shorter time-lag
b~tween settlewent and productivity, etc,), In co~~ection ~ith the clear
ing of ~eavi'y-timbered areas, the question becoilles one of whet~er the
importation of expert lumbermen to direct the clearing a~d processing of
the timber cleared from the land would suffi ciently increase the domestic
rod foreign exchange values of these timber resources to repay the direct
and indirect costs of such immigration.
In general, it seems safe to say tilat, alt1:.LOu€,;h ParaglaY's man
pow.er needs do not appear acute enough to render immigrat ion essential
under existing conditions of technological development, nonetheless immi
gration in substantial numbers would raise appreciably the scope and
tempo of agricultural, forestry and industrial production, and under cer
tain circumstances could be eApected to be largely self-liquiaa~i2g in
terms of foreign exchange costs.
2. Transportat ion
Iillproved transportation facilities is one of Paraguay's funda
mental needs. Paraguay has a public rei lroad network of only a1:out 560
kilometers, the largest part of it representing a line from Asuncion to
the Argentine frontier. where it makes through connections for Buenos Aires.
(')
:!. 17 (')
0
'\)
17 :0 17 G')
C. " 17
-< 0
;,
\
:~"X' .. ~ ." \.
l \. '9,
·····G·· .. •···•·•··••• \ •••••••• "8 • / \ .... ' ~ . .... ~ ./ (
'H080UETA :-
+ ,
40
REPUBLICA
~
1 -. I
" \ > I + .\ .\
\. \
ROAD MAP OF
EASTERN REGION R -EP OF PARAG _ UAY
RAILROAD WITH DISTANCES
COtJIPLETED ROADS IN KM-
ROADS PRO --STRUGTIQN J.E.C.T.E.D. FOR 1M
MEDIATE CON-
ROADS UNDER ROADS CONSTRUCTION -
T!ON PROJECTED FOR LATE R CON STRUC-
LOCAL TRAilS
-u-
The hard surface highway system consists of less than 800 ki~ometers.
Pal'aguay is served by two forei£L"l airlines - Panair do Brasil out of Rio
de Janeiro t and A.L"F .A. out of ]3"tlenos Aires. Mure than 70 per cent of
internal freight movements are by ''lay of the Paraguay and Parana v,-aterVlSi/S
which, undel' normal conditions, are navigable for shipping of 9-foot dreft
for more than Itooo kilometers above the confluence of the t'''o rivers.
Highway Construction,
The Government has estimated that Paraguay needs a network of
paved or all-weather dirt roads of about 6,OCO kilometers; 2.500 kilo
meters arp. considered as the minimum for immediate needs, The present
network (about 800 kilometers) has been almost entirely constrlJ.cted
since 1940, largely with about US$ 6 ..nillion of Exim ».."1k a.icl,., About 10
per cent of these are paved; a further 60 per c~nt are telford basso
One of the first acts of the :;?resent Gover:tlr.lent ~.7a.S to inati
tute a program for the construction of 300 kilometers of pavE'd and 500
to 600 kilometers of unpaved roads over the period of the next three
years. The core of trus prt:lgram is ~1) complehon of a highway ecstv'ard
from Asuncion to the Brazilian frontier; (2) continuation of the
Concepcion-Horqueta road, in the north, northeastward to the Brazilian
froiltier; (3) completion of a road. in the south from San IOlacio to
Encarnacion and thence northeastward to another port on the Parana River.
These roads would serve several economic purposes (as woll as the obvious
strategic purpose of linking l?araguay to Braz:~jJ; (1) they would con
nect the two river erteri€ls (Paraguay and Para'la) and the communities
end economic activities depending on them; (2) they w~ld open up to
-12 -
immigration and e:xploi ta~ion some of the richest agrl.cul turd and timber
land. in th~ country~ and (3) they would assw;e all-\"Teather .. rapid. means
of transportation to present markets for the agricultural and. lumber, aTlc..
perhaps mineral J production of the interior.
For asphalt and road-building and maintena"1ce machinery the
Government is looki,ng to foreign loans.
This program has in it elements of anGlogy with the construc-
tion of the transcontinental railways in the United States, as l"~garo..s
the opening up and development of new lands and resources o
Paragu~ts Shipping Problem --International freight movemen ts in 1946 totaled. sOlliewr.at less
than 500,000 metric tons; internal freight traffic, mostly moved. by
boat r exceeded 300,000 tons. Between 70 per cent and 80 per cent of
water-borne export s and a higher percentage of imports are carried up
and dO~J'Jn the Paraguay River by Ibdero, S.A. t' an Argentine shipping com-
pany. It is apparent that llidero has a practical freight monopoly of
Paraguayfs international freight movements~ This places a considerable
strain on Paraguay's foreign trade and forei6Q exchange availatilities.
In an effort to alleviate this Situation, a State Merchant
Fleet WaS created in 1946 and empower'sd to purchase six ships in Argen-
tina and four in the United States t at a cost of about US$ 750,000
equivalent in Argentine pesos and US$ 952 t 260 in d.o11ars o The ships
purchased in the United States, totaling 3,662 tons, have been
delivered; they are, however, of qualified usefulness beca'J.se of thsir
ex.cessi ve draught for lo,,'!-water operation. Deli very of the Argentine
-13 -
ships 'RuS ph,nnod for the end of 1548. This vlill give the Merctap.t Fleet
about 8,000 tons. It is felt that 30,000 tons is the minimum needed for
effective implcmentntion of P:"1rc.gut:l¥~S pr'.'Clent plans.
Fu.el and Power Avai.labili ties
In the absence of exploitation of coal, petroleum and hydro
electricity, Parag~ depends for fuel and power almost ~holly ~pon ~ood,
of '.l1Jhich fiord than a million metric tons are estimated to be so used per
year.
There is profound optimism in Paraguay that pe~roleu.rll exists
there in cOIDillerci ally exploitable q~ntities. The Union Oil Company of
California during the last two or three years bas invested between
US::j; 3 and 5 million exploring for oil in the Chaco t where it bas a ten-
year concession. To date it has drilled three wells without finding oil,
but at present the company appears to }:lave no ieLea of ceasing operdions.
Hydro-electric power fer ParaguDY aF:,G,9TS to be a thing of the
future. rl'ydro-electric si tea of major pote:1tial capacity exist on t~1e
Parane ill ver, but utilization of tilese vdll be retarded by (1) the inter-
national complications involved, and (2) the fact toot the bUll: of
Parao'Y\lsyan industry is located far aW:3Yt in and around Asuncion. The
rivers close to Asuncion are not generally considered suitable for large-
scale hydro-electric production.
Thermal electricity is produced in Asuncion (t!~e only sizeable
plant) and in other (small) municipal commercial anJ. private electricity
plants. The only available data on electricity production are for the
Ar~erican Light and Tractioll COlilpany in Asuncion, 1'.'hich riS,s a capacity of
about 5,500 kw (against a demand of 5,800 kw), and a montbly prodQ.ction
-14 -.
of about 2 mUlion kwh, and which is presently expanding its capaci",;y by
10,000 ~, providing sufficient capsci ty to meet the expected dSlllend in
Asuncion for the next 5 to 10 years. In August 1948 this COIupany was :::Jllr
chased by the Government from its Argentine owners for 32 million guaranies
(about US$ 10.6 million) payable in dollars, Argentine pesos a..'"1d local
currency"
For the foreseeable future, barring the discoverJ of petrol~~,
wood will remain Par8t.."l.laY t s basic fuel. However t as the area of supply
,:1 thdraws ft:..··.'ther from the main sources of deIaand, the rrice of ~"ood will
increase unless the methodology of its production and. transportation are
improved pari Rassu. S~ch increase will tend to incresse other produc
tion costs, ~~hich would be especially undesirable in the export field.
4. Land Distribution and Use
Of Paraguay1 s ap~roximately 40 million hectares (1 hectare = 2.5
acres), according to a census of 1943, slightly more than Is5 million are
farmed (about 0.3 million are under cro~s), 16 ~llion are devoted to
pasture, 10 million are under forest and 13 million ere currently C011-
sidered unproductive.
According to estimates ulade in 1945,11 the State owned 1.4
~illion hectares in the Eastern region and about 9 million in the Chaco;
14.7 million hectares in the Eastern region and 14.3 million in the
Chaco were priVately o""1Iled •. Of the privately-owned lands, over 90 per
cent Vlere estimated to be included in 25 holdin.gs of more than 100,000
llectares each (mostlJ devoted to cattle) t while tl:.e rem(')ining 2 million
------------~--------~ Y Carlos A. ';{arren: ~cipacion Economica Americana., Montevideo, 1946. pp. 105-108,· {Vol.'" XVI II} ~. 1
-15 -
hectares were divided a~ng some 90,000 to 100,000 smalJ y
OWLers.
Of the 1.5 million hectares which are farmed, about one-half is
divided into u.l"l.its averaging 56 hectares and apparently o1l.ned o~.ltrigL.t; a
third is operated apparently by squatters "d til an average of less than 10
hectares per unit; and the remainder, in units averaging a little more
than 5 hectares each, are operated by tGnallts, or on a basis of combined
ownership, tenancy and squatter rignts o
Of tnl3se 1 .. 5 million hectares, supporting a farm population of
some 6co,o()(' persons, an area of 500,000 hectares included v.'ithin a radius
of 125 kilometers from Asu."YlCion supports 57 per cent of the farm popula
tion and accounts for about 64 per cent of the outpu.t of l1lfljor agricul
tural crops. In this area the average farm has 3 to 4 hectares (7.5 to
10 acres).
5. Govelnment Interposition in the Economy
The Govenrunent does not intend to inject itself actively into
industrial activities, but i.t aims to protect the small producer. to limit
profits at least to wi thin 25 per cent. to prevent monopoly exploitation
of public utilities, ?.nd to impose its guidence upon capital fonlation as
well as upon the direction of industrial and agricultural development.
The Government currently has a. monopoly of telephone comrmu:..ica
tions and electricity proQuction; is mo\~ng into the area of river ship
ping; exerts a, control over the production and sale of meat and alcohol
products and over the importetion and 881e of "'!heat, cement and caustic
soda. Through the National Foodstuffs ~~inistration it atter~ts to
Y Less than 1 per cent is authoritatively said to be held by the church.
-16 -
maintain price ceilings, at the various transfer levels, over do.ulestlccl:'y
produced commodities in short supply or of basic importance - e.go , meat,
sugar, yerba. vegetable oils, soap, flour and salt; and exerts pl'eS8UrG~.
through taxes (10 to 12 per cent). upon the export industry which is poten
tially repressive.
The Government is actively engaged in programs for the exten-
si ve and intensive development of agriculture and road constr..lctiono In
1948 the Government established the Government Enterprises Administration,
to stimulat~ and direct industrial development, if necessary, through
Government competition or intervention. Its first step was the
nationalization of electric p01!'1er production in Asuncion.
- 17 -
v. STEUCillRli OF PE.O:CUCTION
1. Agriculture
Paraguay I s immediate fut.ure depends upon the development of
agriculture. For the time being other developmental projects arc, a me::Jng
to that end.
Agricultural Prodr~ction Methods
P:-:'''Iduction methods throu.ghout ParagJ.8Y are exceedingly primitive,
The lack: of steel tools has left much land lnaclequaJ,jely cleared. ffilere
animal powe~ is used l it consists of oxen. Thus far very littla agrictu
tural machinery has been introduced, though in some parts of the south
and southeast the terrain and the climatic conditions are suital:lle ..
Rotation of crops and the use of cover crops is ix:frequent, with the re
su). t that much of the land around Asuncion has been worn out and must
lie idle much of the time, prod.ucing probablY only a third of ";:Jat it
could be made to produce under modern methods of fertilization and
diversification. There is very little use of milch oattle. The
extrer:;.ely smell size of most farm holdings,. in the present aosence of
intensive methods, has the effect of perpetuating undernourishment, debt
bondage and lack of ambition. As stated earlier, more thDIl one half of
the countryl s agricu1tur~l production takes place 1.'17ithin a rartius of
125 kiloweters from Asuncion.
Agricultural Output
The first agricultural census in Paraoauayl s history was taken
LAND UNDER CULTIVATION 1942/43 "'" SeLECTED AREA
(Within a radius of 125 km. from fisunci6n) .
CHACO
CAPITAL
"
I I
I I
, . /'-; , ,
",,/ ~"''''''' I' ,,' ,," ---," ,
•
; .
"
/-:::=====:::::--'.'
", , \ , ,
, , ,
.. " .... .-.
... ,," .lit . . . + 4
R£I'"ERENCr: Each dot represents 500 Hectares of cultivated Land.-
Concepcion
· . .. -.... : · .. . . . ... ..
· .. . . . · . . . . . .
IGNACIO
",; .. .' .
.. .. " "" .. . .
' .. ",,": : "
, '. , '. ,
, , , ,
, , ',' • 0: ",,',
.. " .. "
, , ... -..... ". ........ ~
1',,"-_ .. -,'
• • I
:~::.:,,~I
;. .. +
.. .. .. +
•••• Irr • k
. -, ,
.. ..
, , , " , , ' , , '
"''''" \ .. ~ ~\
,
" .-. I
I , , , , I f I , , .. -- .. ,
f , , .. --~ ..
.... ' .. .. ENCARNACION
~ I
~
-18 -
in :1.9+3. under the auspices of United States techn.ical E'xperts. At that
title Paraguay I s major agricultural crops, in order of areas planJ.;ed, Ylfjre
corn, cassava, cOttOIl, sugar cane, peanuts, rice and tobacco. .lUtl:'l.ol:gh ic;
has been officiEJ.]y stated that pl~oduction of consUJ.l1ption foodstuffs
remained practically stationary bet'Veen 1938 and 1946, the official l'
brec:kd.o~:m figures 00 not appear to bear out this conclasion • .:Y These
figures (which r.-:ay be optimistic estimates) i:la..icate that overall agri-
cultural produ~tion increased from 100 million metric tens in 1938 to
1",4 million ~n 19' ... 6 and (despite lJ.nsettled conditions) to 1.9 million
tons in 1947, with increases in both export and consUf.r;>tion categories,
including eggr:3 and cheese. -. There has been some substitution of expol't
for consumption crops, as well as substitution of ifu~orts (notably in the
case of ".'heat) for domesticelly produced crops, reflecting popuJ.6.tion
shifts to the towns and consequent cbanges in eating habits. The overall
increase in production in 1947 despite the ci vil war presumably for the
most part reflects exceptionally favorable climatic conditions, in ~ddi-
tion to so~ increase in acreage end limited improveme~t in methods~
Agricultural Development .....:::;;--_. __ ..... '" .... _-_.-Increased agricultural producti vi ty has been the first "must tf of
government planning since 1940. As basic instrur:lents to this purpose
roadbuilding and 5.lTJ!lligration have assumed in the eyes of man;:r of the
authorities an importance of almost equal urgency. The Government I s pur
pose, as rapidly as possible, is to locate immigrants and/or Pa=asuayans,
preferably in mixed (!olonies, on farus of about 50 acres eacil, devoted to
!I See Table No. 1 in the Appendix.
- 19 -
mixed and intensive farming. and provided ',\'ith good farm-to-Jlar~{et roads.
In 1943 the Government established a. IISupervised Credit II Adm:nis-
tration to plan. administer and finance a wide-scale progrnm of agTi~ll-
tura! colonization and resettlement. Handpicked farm canJidates are prc-
vi~ed with land, house, animals, implements and personal instruction in
modern methods. T.he Government purchases and provides ne"! land where
needed, V<1hile the Central Bank supplies sufficient credit for eatablish-
ment and maint~~~ce through the first year. T:~e estimated credit needed
per farm is TTS$ 2,000 .... 2,500, but to date the average credit allotment
has been less than US$ 500. The number of farmers presently enrolled
under this so-called "Supervised Credit II program is about 3,000. Techni-
cal direction of this plan and a large amount of policy infl'..lence have
11 been vested in STICA: this very largely accounts for t:le notable suc-
cess of the programo
In 1948 8El:ricultural development Was organized on the basis of
a six-year plan, the exact outlines of which are tentative. depending upon
the amount of foreign assistance which may be obtained in the form of farm.
machinery, equipmer.t and implements o The plan aims (1) to make Paraguay
self-sufficient in those food crops Vlhich are indi.genous to Paraguay;
(2) to develop e~orts, making rice the main eA¥ort crop; (3) to coordi-
nate production ill accordance with annual estimates of consu.'IIption needs
and export markets.
Wi thin the framework of tilis plan the IISupervi sed G:redit" pro-
gram will provide the instrument of extension, while STICA will provide
~----~-------.------:1 I S€.rviciv :r~~nico· Interamericano de Cooperacion J:.gricola, a mixed ..... 8El:ency of the United States and Perag'.layan Governments, has organized and directed agricultural research and instruction in Paraguay since 4.942. Its technical achievement appears to be outstanding and its present popularity with Government and farrners alike is real artd growing.
.... 20-
the experimental work, tncluding the search for new experts, the seeds, and
the technical training and tutelageo Immigration is looked to to supply
the etimulus of example and the leaven of experience. l!'oreign cl'eiit h,
eA~ected to offer the necessary implements.
2. Stockraising
ThE:. cottle industry accounted for abou,t 14 per cent of national
income in 1946 and about 33 per cent of the value of exports, lliost pa.::ts
of Paraguay are suitable to stockraising, especi:3l1y the northeast, south-
east and the Chaco. Many large ranches are foreign-owned.
The Par~ayml cattle population totals an estimated 4 million
head, comprising about 3.5 million cattle, 300,000 horses, 225,000 sheep,
50,000 swine and 20,000 mules. The cb.ttle are mostly poor que.li ty rane;e
cattle. Improved breeding has not been much developed because (1) refri
geration ships r..ave not been available for shipping prime beef, (2) J')vern-
ment provisions do not allow for distinction between grades of beef, and
(3) canned beef production places no premium u.pon quality.
Currently about 3~0,OOO head are slaughtered aIL"1ualJy, 250,:)00
for <ioLl<3stic consumption. and the reme1ndel' for export, in the form of
corned beef and other moat products to the United Kingdom and the United JJ
States.
At the present time the export meat industry, operating at 60 ....
75 per cent of capacity is cOIiIpelled to depend upon imports from Argentina
for about half of its raw materials. The Gove:rnment hopes within a short
!I First grade corned beef goes to the United States; second grade corned beef and other meat products to the United, lungdom.
-21-
time to make available to the export industry 500,000 head EIJDUally.lI
The major problems facing the cattle industry are (1) inadequate
means of transportation from range to market; (2) lack of fencing, \7el: s
and water tanks, with the result of low calf birth rate and high. calf
mortality; (3) lack of pest control; (4) laci: of interest on the part
of most omers in improving their herds. J:\.gainzt these ~dicaps the
Government and a national Stockraisers Association, with the help of
STICA, is currently attemptir.g to take steps. The speed with vIhich it \"Jl11
be able to ;.')ve will largely be conditioned by 1 ts access to foreign cre-
dit for necessary equipment.
Hide s and Skins
Cattle hides are essentially a by--product industr,f ir.. Paragu,ay;
cattle are not slaughtered for their hides. Over 90 per cent of the hiQes
produced are exported, untanned, mostly to Europe. The quality of the
hides, owing to tick bites and othe;r blemishes, is not acceptable to the
Uni ted States market., The processing for export is cond~(.J .. d good. The
processing for domestic cons~tion is poor, owing to low prices offered
by domestic users. Hides other t:han cowhides are mostly home-cured a:n:i
applied entirely to domestic uses.,
In addition to animal hides, ParBt,\lB.Y produces wild enjmal and
reptile skins. notably crocodile skins.
3. Lumbering ,.. 7t' ..
Forest products (including tannin) accounted for about 5 per cent
~ This may become of increasing ~mportance in view of Argentina's recent restrictions upon live cattle for e~ort ..
- 22-
of national income in 1946 and about 24 per cent of export values. A
large part of eastern Paraguay is covered with virgin timber.!} mostly
hard woods, suitable for construction and flooring and furniture PU'l'.'))OHes.
There are at present few soft wood trees in Paraguay, but it is proposed
to include soft woods in reforestation operations.
The total volume of all kinds of timber in the eastern part of
Paraguay is estimated at about 2.5 billion cubic meters, 'which is slightly
less than the average annual cut from the forests of all the world. Of
this total !tgtand" about 33 million c~bic meters is of a size and type to
be lIexportable rt , though an additional 250 million cubic meters is cur
rently merchantable fcr lumber. Only a fraction of lIexportable ll trees,
however, are accessible under present conditions of transportation, a
si tuation aggravated by their be:ing w::'dely separated. Until facilities
are developed in Paraguay for using "unexportable" timber I production
costs of timber exports will remain high.
More than half of wood pro:iuction is for firewood.g! More
than half of the remainder 18 eJq)orted in the fom of roun.d or squared
logs. Less than 12 per ~ent of production in 19)+3 W&S o.omestically sa:¥ved.
There are some 60 sawmills in ?e.ra{!flay, 'but they ::u-e obsolete; tl".e+,E" is
no modern mill capable of economicfu and accurate lu:::J.ber production.
Such a plant is one of the present desiderata of the Government. because
(1) it would increase materially the value of wood product exports, and
Y Too little is known about the timher stands in the Chaco to V:lJ.rrant discussion, e.xr;~pt to note that quebracho in large quanti ties is available there.
E1 Total production of wood products in 1943, for which the available figur-:.s are considered reasonably dependable, was about 800,000 cubic meters.
MAP OF FOREST EXPLOITATION IN EASTERN PARAGUAY· 1944 ·
PARAGUAYAN
CHACO
ARGENTINE
CHACO
PROVINCE OF CORRIENTES, ARGENTINA
SCALE
LEGEND:
o Mechanized Sawmills
a Plywood Mills
.... Quebracho Extract Plants
~ Zones of Virgin Forest I ~. - ---l® m Zones of Principal Exploitation I
~mJ Zones of Charcoal and Firewood Productior.
STATE OF MATTO G ROSSO,(I
RAZI;y If
~~~~'//~'l/~//~/A[%! if 24
I'
~o ,0
0'
PROVINCE OF
MISIONES,
ARGENTINA
OF DATA,
27
prepared by Inler-American Technical Cooperative Service. Minislry of Agriculture. AsunCion
retain in Paraguay SOIDe cf the income from lumber production which now
accrues to Argentines; (2) it would reduce the am01.Ult of prepared lumber
currently imported ·from Argentina, and (3) it would pave the '.f.-a:1 for a
dO!~lestic furni tt:.re industry.
Tannin (quebracho) is produced along the Paraguay Bi ve!' in the
north, mostly by foreign firms. Y The present capital structure of Parag~yls lumbering industry
is basically foreign. Owing largely to inadequate transpoI'tation and
equipment; :~.rge amounts of capitcl are necessa.r'J for major operations
(small operations, for fuel wood, are carried on by many farmers in their
spare time) 0 Such capital is not available in Paraguay; it is supplied
from Argentina, and the resultant profits, as well as control and direc-
tion of the industry, rest in Argentina.
4. Minerals . There is documentary evidence that both in colonial days and
during the period of Francisco Lopez iron was n:.ined end smelted in Paraguay.
Subsequent explorations have reputedly lndicated the existence in qua.'1tity
of gOld; copper, magnesium, tin, iron and other min'3ral deposits in
various parts of the countryo Nonetheless, today only limestone and
kaolin are extracted; both are said to be of su,erior quality_
5. Construction
The only data presently obtainable for construction are (1) the
nwnber and total value of building permits issu,ed in Asuncion, (2) public
(mostly public works) construction.
Y Argentina and PlU'aguay have a world monopoly of quebracho production. in which Paraguayts share is 30-35 per cent. At the end of 1943 l?ar~an interests unilaterally reduced their price for quebracho because eXisting prices were reducing exports.
- 24-
The first are summarized in the following tGble:
1940 1942 1944 1946 1947
Number of Permits 513 1060 454 651 33.L
Total Value (1,000,000 guarenies) 2<16 1.6 403 6~2 3.8 Source: Central Bruik of Para~
Th'3 public constru.ction is shol:m below (1,000 guaranies);
-1940 1942 1944 1946 1947 1948
Roads 2,260 4,116 3,980 473 nea. n.a.
Hospitals 431 207 1,537 174 ~
Schools 118 115 33 n.e. Markets, silos and meat-
60 packing plents 2l 1~37JJ Banks 15 180 c:; -City Streets 117 597 557 Hospitals under construction 3,400 Other construction and
repairs 72 389 82
Total 3.073 51 625 7,569 647 3,400
Source: Central Bank of Paraguay
The absence of data for 1946, 1947 and 1948 in the above table
presumably, except probably in the case of road. construction, reflects
slowness in assembly of data rather than a cesset ion of construction.
::Soth tables are taken to include repairs and upkeep as well as new can"'!'
struction. The large sums for road construction in the eal'lier years
reflect a loan of ubout uS$ 6 million from ~m Ba!l~ beginning 1940.
y In 1945, G 3,312,000 were spent, mostly for the new Central BElIlk building.
.... 25 -
6. Industry andCo~~erce
Industry
. With the exception of forest products - tannin. timber a.'1.d c[~ .. :
coal - IIDlch of Paraguay's industry is located ;in and about Asuncion and
will probably continue to be so. It consists of simple processing of . y foo~, textile, leather, forest and building products.
As noted earlier, there is little nominal unemployment in
Paraguay, but considerable inefficiency in the utilization of available
manpower ref',)urces", Improvemen t in this situation, as well as reductions
in the military persor~el (currently estimated at 20,000 to 25,000), will
probably release sufficient potential industrial labor to meet growing
needs if they don't grow too suddenly",
About 54 per cent of industrial production is for the e""-l'0rt mar-
keto
Industrial Production
Paraguayfs industrial development has been economically condi
tioned by (1) a. lack of domestically available industrial raw materials
and sources of power (e.g., metals, cement, petrole1.llll, coal, lllfdro-
electric power); (?) e. lack of consistent and substantial foreign trade
balances andlor inflow of foreign direct investment wi til which to reme'iy
the above deficiencies; and (3) a lack of sizeable internal markets.
This situation has been abetted unt~J. ~'?cently. at least, by a lack of
domestic investment (reputedly because of 1-~':i tical instability) and by
a steady outflow of profits and savings - for poll.\.{.-Jal as well as com-
roercial reasons.
Y See 'l;able No.2 in ti:e Appendix.
- 26-
The gross value of industrial production in 1946 is estimated
to have been 293 million guaranies. The type and relative importance of
J?aragueyl s chief industrial products in that year, on a gross vpJ.ue bas~ s,
were as follows:
Meat product s Other foodstuffs Beverages Tobacco Textiles Leathergoods Construction materials Forest products
Total
10.8 % 11.8 % 3.0 % 2.0 % 6.0 J6 1.7 % 0 .. 9 %
60.0 %
96.2 %
Meat and forest products production (mostly under foreign con
trol) is virtually all for export. "ether foodstuffs" consists largely of
wheat-milling and the manufacture of 'Mheat breadstuffs, the wheat for
which is largely imported. Textile pI'oduction at pre~ent meets only
25-50 per cent of consurnption demand and is domestically consamed.
Leathergoods consist largely of leather taruling and Shoe-sole production;
uppers ar€- imported from Argentina. Construction materials are mostlY
bricks, tiles and ~imestune; cement, reinforcement materials and hardware
have to be imported.
Industrial production bas increased considerably since 1938 as
a result of migration from the country to the cities; road. construction;
expansion of the money economy; foreign demand and high prices for er20rtSj
advertising, and increased Central Bank ored! t both to the Government and
to the publio.
This is a trend ,~hich will continue, for, although increased
agricultural productivity is recognized as the absolutely necessary first
- 27-
step, it is considered as only e. first step. The authoriti.es appear to
be under no illusions as to the extent and degree of industrialization of
which Paraguc'lY 1s now capable; but they are determined to get on to m:.:::
industrialization as quickly as possible. Efforts currently being
realized to double the production of meat products for export, cotton.
textiles, and electric power are steps in that direction.
Investment in Industry
.An € s~imate of "industrial" investment, made by the Central
Bank of Paraguay, b~1sed on corporate balance sheets. and probably refer
ring to 1946, offers an admittedly very rough appl'oxima't.ion of the vL'lue
of Paraguay's industrial plant, vlhich is assessed at about 130 million
guaranies. Uet income produced in t.he (nominally) SBIne branches of ~ 1/
industry in 194b totaled about 45 million guaranies,,- This does not,
however, include small and unincorporated units, the total contritution
of wl'.J.ch to nationnl income in 1946 is shoml in other estimates to be
greater than that of those Ilindustries lt covered above.
Commerce
Commerce is estimated to have contributed about 12 per cent
to national income in 1946, of ~hich about 5.5 per cent represented
import trade and 4.4 per cent export trade,
Import trade is currently probably the most lucrative occupa
tion in Paraguay because of the size and intensity of the demand for
most kinds of inported goods. Capi tel turnover is rapid aYld the present
danger of loss is practically nil. In some commodities Government price
!I See Table No" 3 in the Appendix.
- 28-
control acts as a damper; but if it becomes too much ~o, ~he ir.:rporter
lets the Goverrunent purchasing agency handle those goods. T'ne preser.i.t
exchange shortage, ,,!hich has reaul ted in exchange-licensing, is ~'estri('t-
ing the range of profit opportunities and in some instances is creating
real hardship; but in general the import trade is s'l.uficiently fluid
to adjust more or less easily to these restrictions. T~utes on imports
are at present merely passed on to the consumer.
Exforters face more problems, since.,..... except in the quebracho
monopoly;:}' ,- their prices are set for them both by foreign markets and
domestic price controls. However, they are chiefly large, well estab-
lished foreign firms with varied interests. and are willing to opere,te
on a lower profit basis than domestic operators~ Export taxes, to "1hiOO
they are subject (10-12 per cent) have not been a problem in the period
of rising prices, but could become so if prices abroad were to fall while
freignt rates continued to rise and production costs remained unchanged
or went higher.
Y And currently, even there.
-29-
VI. INT:ERNAL FINM''jE
~oney Economy
The money economy probably covers r.:ost of E;:,~stern Pa:'agl~<ay,
though in a far fro!'! all-inclusive sense. This coverare has been CO;1-
siderably broadened and deenened in recent :{ears as a resu:.t of road
construction and migration to the cities.
J'he Banking S~TS~
i:;ween 1941 anG. 19115 < fo~r-l'eaching reforms of t;1e , monetary :md foreien 8xci1anZ;e s;'Tstens rere put into effect to rem'~lr the
damages caused the Chaco '<ar and 1/
inefficacious :f.'iscal 3C1d monetEry
nractices of long stanciing. - The currency ':,'as sta:::d.lized and unpeft2:ed fro:n
the Argentine Deso; Argentine Desos ceased to 1.;e 1 tender; exchaC1ge
controls were instituted, and e::cchange rates stab";
The P3.raguayan bankins s;;stel:": Y)reseC1tly consists of -::-he nank
of P.:.raguay, and four foreign o:r-cmch ban::s ,"hich 'jrei'erence Enc tra-
ations. Older private le!1dinc nract5_ces at ver;:,r high interest r:<-,es are
disappearing. Other sources of cred;_t are nat signi:'ic.:lnt.
The Bank of ? aro.fUay, vri th :oa:::15 6.!1d d.:.scounts at June, 19';8
of G50.1 million, and dewosits of (i31.2 !:'~11:ion (co!:''Jarec. with 0.20.1.+
and G38.9 millior., :r-espectively, for all foreicn banks), is the source
of currency issue, the fiscal agent of the Government, the exc)1an~~e
i} These ref~1![ere largely fomu1ated under the ~Jidance and ,it:l the active assistance of represent,atives of the U. S. Fec,e::'al ':eserve Board.
- 30 -
control ,bureau, development bank and source of Covernmel'1t credit. It
comprises a Honetary (central bank) Department, a Banking (co:rJ'1ercial
bank) Denartment and Hortgage Loan and Ar.rtcultural r:redi t 1;e1,)8,rtnent s 1
each administratively separate from the others. O'verall monetar~r, bankine,
financial and economic policy affectinr the co<.mtry internally 01' inter:","
nationally is determined (at the non-nolitical level) by the l'onetar:r
Board of the Bank which is chaired by the nister of F:tnance (the 'Oresent
President of ?araeua:t was l'inistcr of Finance clurine: the t1YO :rears pre-
ceding his inaucuration in August, 1948), and ir.c1ude3 a representati'Ve
of trade and industry. The Bank is currently the sole ir.:sti t 1.1tion in
Paraguayequi'J['led for economic analysis, and until quite rectlntly has
enjqyed the practically universal reputation of functioning outside the
sphe~e of politics.
The make-up and extent of the reserve aEainst the curre~cy is
rx:t fixed by law, but is left to the judgment of t~1e :'ionetary Board, The
reserve requirements of the commercial banks (il:cluding the Depart-
'!!lent of the r.entral Bank) a:'e flexible (within 2.imits) at the c1:scret,ion
of the lIonetal"'Y Board. The interest rate stru~ture af the banking syster::
ranees from 6 Del' cent to 12 1)er cent, depe;:;.dinr on the !'.at1J.re and ~a ...
turity of the loan, and the r:redit status of the borrower. The iEterest 1/
rate structure is relatively flexible.-
y Jin idea of the Central Bank's rates For ggricul tl.lral and sor:e industrial For cattle, certain crops, and other
ShO'W!l by the f ol1ovrin[': : development ••••••••••••• 6% industrial uevelopllent ••• 7%
1.,~ortgages on land .............................. t • ,. .... " •••••••• ' ••• • 7% l!fortgages on houses ~ .................................... ., ... " .. 3% Commercial loans .............. ~ .................. ~ ....... ., ..... ., .. " .... 8% Personal loans .•... ' •.. ' ..•.............. , " ... ., . " .... , . • .• lO-12~lt
... 31 -
The (i.onetary Supply
From 1940 to June, 191;8 the monetary
C"L'eased h50 ner cent, from G1S.0 nillion to Gi32.5 mLLlion, ES shoytn 1/
below:-(1,000 guaranies)
~-------------------------.--~----------------.-----------.---.------------------...---------------------",-----,----1940 19h4 June, --_ .. ---_-----.-. .... _ .. -
Currency in hands of nublic
Denosits subject to check
7,957
7,030
20,852 28,332 45,0(11
26,176 36,232 - ....... '....-...--._---,..---------
Honetary sUI_ply 14,987 47,028 65 ,o61~ 32,451
-----------------_._--------_ ... ...........---.0_------The requid te balance sheet
for presenting a precise 6emonstratj.on of t:le sou:"ces of thi.8 ;'l~3e,
but from available data it is ~ossible to distinguish the relative "lJres-
sures of expar..sionary forces durin:, SUCC8S ye intervals. Frm1 1)1.;0 to
194h the strongest eXDansionar;r force was the ~Lnflux of exchange,
followed COL':lerd.al bank loans to the nubJic ane:. Central
to th,e Government; Central B::cnk loans to the puL11.c contributed little.
From 1944 to 191+6 exchanr:e moveElents, Central 3ank CTp.dit '~(l the (e vern-
ment and :lontral Bank credit to the public contribl"lted 8.~jout to
the increase in the money suY")ply; cornnercial bank loans contrj.;)1.:ted Ii tt.'e.
The increase of Central Bank nr:Lvate credit c1urirW t~lts "')eriod ref],ec";.,s,
anong other things,!nore liberal treatment of Sy',&ll (letters. F:::-om 6
to June, 1948 the up,;n;arci 'Jressure "as led
(mainly Sentral Dank) to the Duolic, and :i.:llcreases in t ~1e debt
holdings of the
to the rlOl"etary
r::entral Bank; the' balance
.,?1 sUYI'Dly ;'ras ner:;atl ve.
0: Ylayments contribution
1/ It should be noted that an indet!31'winate but 0or..sh:erab1e '!crti.on of this incre,-;.se represents displacement of }~rcent:i.ne DeSOS iron cir.-:u1 aLian in ?araLuay bet'.:een 191.+1 and 17'111:. Y See Table No.4 in tJ,G k1pendix.
- 32 -
Over the period 191~o to 1948 as a whole, the stronr;est upytard
pressure on the monetary sU'"';;:.y ilas been the increar,e ~n ~·)"u.blic ciebt hold-
ings of the Central Ban~7 especially ih the last two :;r,)ars, (0-56:Tin 'li(JE
to September ':;0, 1948),- follo'iJed by increased loans to the PU;):;j~ (G~~.
million to June, 1948), and by net annual novements of fo,.-eign e~~chanees
(G32 million to June, 1948).
There appears to be no reason to expe:::t in the near future
considerable reduction in Central Bank credit. In the first place~ the
present Government is cOYf!mitted to a policy of aericultura1 and public
l':orks develvplnent; and in the selJond nlace, ';[hethe1' for the purposes of
justification or not, responsj.ble ,'}onetary auV;orities anpear to believe
that the monetar;;r su~")ly is not overlarce for current and expected tro.1"8-
action needs.
Prices and frofits
1igainst an increase in. the of h50 ~')er cent
from 19ho to June, 1948, the official weighted iroexes
and cost-of -living (of workers) i::} 1.sunc~,-or'. ir:.creased about 280 >~el~ cent,
whilE) the index of wages of 'clniOEized in Asuncion increasGc' about
170 per cent; the conponents of' the latter index, however, c 2/
ably.- As observed previonsl;'r, s of many basic cOi',=ao(~it:.es, c"".:;th ii 1 ••
ported and doraesticaJ.ly produced, are "controlled" the Goverll.ment. In
the case of
of which is
imoorts tbe or-ice cei1ir:.gs involve subsidies (tilE
nDt available) ,,» Under nresent condi tior.s of domand cmd
cup'Oly shortages caused by recent droughts arlO restricted imClo:-:-ts, it is
probable that the nrice ~eilings are widely evaded. It is 8stiEe:,ted,
moreover, in Para£"uay that the recent large exter:.sion of CentraJ. Bank credit.
to the Government for nublie '"fOrks will raise nrices another 15 ner cent.
Larce1y as a result of the Civil 1·;ar of 19h7, and the present GavernEentts devE:lo1jment proGram. To some extent the lag between Vlrage and price increases is offset by a Year-end bonus of a month I s wages decreed in 1946. Wheat imports are subsidized, by a 6 per cent tax on non ... tlessential ll ll!prta.
- 33 ,..
The effects of p,ricechcnges from 1940 to 19}+8 indicate so:ne re-
distribution of income. It appeers likely that the real income of dometic
entrepreneurs and capi talists has increased, while that of inclustrial ~"o::.'l::ers
in generE'.l has fallen (at least in Asuncion). Concerning agricultural r(~d
income it is difficult to speak with assurance, but probably on balance it
has risen somewhat.
Prcfi ts theoretically are held within a 10 per cent to 15 per-
cent margin on turnover. depena.ing on the storage and. l1a.lldling involved.
At the present time, r.owever, as a result of the snortage of goods and the
abundance of money, there is a thriving black IDal'ket Slid profit !nargi::1s
in many Cases run well above those officially established; in the abseDce
of official controls, and especially on ili!ported. goods, they not infre-
quently run above 50 per cent.
2. Public Finance
Federal Budget,
Since 1945 Paragua¥ bas had a single fedel'~l bu.dget which in-
cludes an "ordinary" budget covering the regular operating ministerial
expenditures, and a very small IIspecie~1I budget for agricu1t'~rel develo:Fnent.
In addition to the federal budget tnereare (1) small municipal budgets
(estimated in a total of G4 million in 1946) on a purely current operat
ing scale, (2) separate budgets for "Special Obligatiol1s 11 (Brazilian loan
of 1~+2, and certain PubliG Services), and (3) budgets for four autonomous
State enti.ties,)) The budg:ts for Special Obligations and Autonomous
Entities have specifically allocated revenues. Budgets are applicable
only to the year for which they are passed.
Y Bank of Parae,"-laY, Port of Asuncion Administration, ~Tational Telephone Administration, Commission for Economic Recovery.
- 34-
Actual receipts, e},.-pendi tures and balancES liEder ~r.e
Ilordinaryll budget from 19uO to 1947, 'N"i th bu(geted revem::.es 3)1.d e:::pendl-1/
tures for 19h8, are shown be1ow:-
(millions of guaranie8)
1940 1941 19h2 191+3 19114 191,5 19),6 191:7 191;8 "_~ __ "' ____ 'M
Receipts 10.8 12.2 Ih03 16.2 21.3 2h.5 36.8 h1.7 Jr.) .0 2/ 3/
Ex;?enditures 12.2 13.3 16.6 20.4 26.2 31.3 35.£....)9.3-_ 60! 3-_ - . " . ..
Sur;?lus 0) -6.8 fl.2 fl.l~ -12.3 or JeCcit (-) -1.1+ -1.1 -2.3 -I~ i. 2 .9
--.-.--------------- -~---~--,-. ---.----
ciefici t-fina::lcinL; basis, tbe net G.efici t since 19):0
Dillion. Between 19ho and 19L7 the annual cost
and agencies increased about 220 per r:ent; by 191.t,j V1E': W<.iS about
390 per cent. In view of political developnent.8'-)ctrt.ic~,.t:lar to Pa>.'a[llay
during this period, and in vie'y of the more in the
concept the f1..tnction of Govermc:nt in devclopinf:" c01.mtries, this in-
crease is perhaps not startling. Hor" by con'xl.rison 'r'i U). :ncmy ot};Dr
economies, is the cost of the Feder2.l Govornment (less than nor cent
of probable net national incone in 19L~8) op:)ressive, since it incluces
outlays for capital fOlTflation "Thich uri 'late tal 'doulel not llnc'.ertc.ke.
1/ SOEle :::,ouCh adjustment has been neco::; to ;)rinf' oar'y years Irom an Aucust 30 fiscal year to a December 31 fiscal year.
?/ Excludes G5.1 ::lUlion for anortj"zation of public debt.
y :excludes Gl1.9 l~Ulion for amortization of public debt.
- 35 -
A breakdovm of e:xnerldi tures for 19'~8 indicates that J:'ciU.tary
and Dolice expenditures rCl')resent abo:Jt 35 "')er cent 0f the total, edu~
cation about per cent, public health ;).bout :;.5 'Jer cent, a::d t:;oc-1.oJ. 1/
securi ty and public debt carrying costs acout 4 per cent each.-
"0rclinaryl1 budeet revenues are shmVTI below for s01ec'ted yec.:::"s:
9r(inary Rlldset Ptevenues Fer 3eleeted Years (rril1ions or guaranies)
'.----- ---~.-
1938 19h2 19hL ...... ,-Revenue Source
----------------~.~~------~ I!11port Taxes Export Taxes 2/ Internal T<ixes-Tax on Business Profits Real Property Tax Postal and COi·,TlUJll .cations
Taxes Pension Fund Consular Duties and
Exchange Profits 11 Misce11aneous Fevenues S~ecial RevEnues
3.9 0.1 2.0
0.8
0.2
0.1 2.9 C.3
W.j
~; .5 7.7 0.7 1.1 )1.0 6.7
1.4 2.0
0.3 0.3
0.2 1.2 0.7
ift.o
13.1 1.1
11.6 2.7 2.8
1.,3 109
3.0 5.5
13.1 1.0
11.5 );.6
w .• o
1.,0 1.5
3.1 8.3
Source: Oentre,,-l Janl;;: 0:: Paragua7: jiinistry of r,'inance. -~------------ ..,.;;.-...;.-.-....... "-,-.-!'----.•. ------~.--.-------~
Ir:,!:lOrt and int.err:al reVGm::.e taxes ror'o.in the ch:if~f 801;.1"('88 of
:cevenue. To ('I. ate there is no cenerali2.ed income tax ::'n
tax on business profits is a sDocialized inc one tax, and t~e reel
tax, because of nU~';erous eXeLff)tions is ta.rtar::ount to a tr:.x on J_arr~e -.nCQ1:~es.
Y See TablE:' No. 5 in the Appe'ldix.
?J Includes inheritance and taxes; s; taxes on alcohol uroductioh, alcohol and liQuor c0ns'.u:ni::.ion, a!ll'l liquor licenses; sales taxes; and special taxes on cat,tIe an.-1 tri:Lns:ers.
Includes special taxes on exports (G3.L. mil1ior: in 1948), 20 per ~ent of Drofi ts of sutono~!lous state entities (G2.9 'lEHan) > t2.Xf;S on petroleum. exploration, et cetera.
- 36-
Import tax rates a!,near to aVGrare arounc So 'Jor ('ent. The
:;.,lcrcantile Incone tax rate has been dcubl .. ed recently to a -1:,09
of 20 per cent. The rate of the real eft-ate tax. varies Y7ith c·,": i ')r
and size of :lOlding and the amount o.f im!1rovemen t; it is not V18'i18U S
onerous.
follO'Ns:
3.. Internal Debt
The L1terna1 debt, on j~ur:ust 30, 1948, lliC;.S l:;ro:(en ;:::o'.m as
( '1""·· f tlL .. J.lons 0
1/ . )-?;u.a rarl1 e S
========:=.::====-==-= .~---.;::::.=-=.=-=-==:::;::;:=:;;;: ..... --.~---~--"""":: Currency
Issue Bonds
Long-term Conversion
Bonds
IS-Year Conversion
B0!1ds
Sho:rt- Uerchant
TreciSUl'Y
ot~er Tot.al Debt
19L7 ------------------------------.--------~~~~----.-------------------
8.4 9.1 2 .. 6 a.h
P.lnc-Jst in its enti:,::,ety the internal debt ::is
B-:..nk. lon["-'~erm conversion issues rDy)Y'8sent conver8ions of aCC1.Ln.m-
lated indebtedness 15'35 cm(~ tnt": currency
issue bonds are being consistently reduced.
bonds, generally of three-year maturity, reoresent recent ~/ de-
fiei ts .. Service on the7.1 is a;:tona tic, since the Central
powered arbitrarily to ciebit the Goverl1r'011t's currert 2CCount for the
service due on them. The::T reflect 'Jast
and currEnt account, ane: tE-nd to be refunded ~'ather than amort2.zed.
Y See Table 'lJO":'"""b in the Ji.oDendix.
- 37 -
The Uerchant Fleet bonds of 1747 reflect -[,he recent purchas8 of ten
sP.ips ir. the United stti.tes and Arrentirla for freight t.ranSDortatton pu:::'-
1)()ses on the Paraguay ill,ver b€t-:leen Buenos Atres auc
purpose of reducing the Drcsent foreign exchange costs of such
movement.
Since the end of Aupust, 1948 further issues of b0!lc'ed deat
in the amonrlt of about 025 rnUl i.on ::or the financing of ')l~blic work
projects, and the refinancinG of former
authorized by the GO~lerr:nert. Thi s 1':1J1 rai::e
bonded internal indeb1:,eclne~s to abcrL~t G6, Service OE
terna1 bonc:ecl de;"t in 191d '\AS ::;etec at, ahcllt Gl.6
4. Ca';yita: :for: :<::Lion ---
fiGures on capHal over thE: Y'ccent ;-;ast.
capita,l for1:.ation, however, s~:nce 1941, IJay be obt;o,ine6
f011owine: estj.mated E:oX!>E:nditures:
(millions of
Brazilian loan (Public 1'."orks) ExiJ'D. Bank loans (T:oacis) Herchant Flf':et l\gricul tural ~;achinery IrrJorts h.:lectric po-,rrer ~:X'~c::.n~ion
Textile T'ro('.uctior~
U. S. st&te Denartr:18nt Gifts SuY)ervised tuI'2l f'rt?cli t
Increased _ Ad.~usted
?ublic
10.0 1:).0
L; .0 5.0 is.o
E; .0 .0
3.0 1.5.0 25.0
c
Concerning net ciJ.pi tal :Lnvcstr>,'iTL eveD. lec's i(ea s
!I One dollar - 3.09 guaranies, at '!jar.
,
.... 38-
because of the unknown amounts both of capital destruction 5n the Civil
War of 1947, and of ulurep1aced obsolescence and depreciation since 1941.
The above estimates suggest a rate of domestic gross capi',;al
formation of some 3 to 5 per cent of national income, suppJ,emented by
foreign capital to become some 5 to 3 per cent of national income. The;!
include, however, or.ly discernible and reasonably known items, particu
larly in the a.omestic field. If rough estiwatao be illaCle of private dOll;es
tic capi tel outlays (for example, by farm OY.'!lers and by commerce a.'1d
ma.'1ufacture.;s other than textile for additions to plDnt end stoc:cs) it
would seem that cl.or:lestic gross caplt:ll formatior.. over the period canr~ot
have been less than 10 per cent and. was probably 10 to 13 :ger cent of
national incorue. Tb.at is, in 1946 total dO;:lestic resources BVEdlable
for and devoted to improvement in all econ::rwic Bcti vi ties were proba't1y
sO'llething between US$ 15 and 20 million equivalent.
- 39 .;..
1. ForeifJl I:xchanr.e Control ared i'orei[J.l :;;-;:~chanr":? Holdincs --,--------ExchanGe Control
Foreign exchange controls y,rere introduced in 19L1, oyc::ance
movements are under the supervision of t~:e i,conetary of the
Rank of Paragua;r, which ~ossesses, within statutory OD: ex-
tensive disc.l'etionary Dovrers in the al1ocattoD of eocchange. Sl.rne
September, 1947, inports have been strictly dtvided into "ef3sential",
lIes:2ential hut deferro.blel!, and "non-essential!!. C.ontrol
kcvements is achieVed 4~he requirement ex;Jort and h:lport exdlcne:e
authorization. Cor:u;~ocii ty controls aI'£; not utilized.
is tro.ded in three separate marlwts:
(buying rate for dollar, J. rate, 3.
IIfree" rcarket (buing rate for tIle dollar, 3.678E selJ rate J 3.7 3h) ,
and the ftauctionTl ;~!arl:et (selling rate elL)·!"!:ly hi)ler than on the
n free It m9.rket). In fact, hovrevcr, all three are ial in
sense that the rates for all are in set the
The diffe;>ences among th8 three markets lie in the SOl.TeeS of th3
foreign e:;;:change purcnaseable in them and the 7Hr1')OS05 for "\,l!ich zn.;ch
1/ exchane;e !!lay be purchased.- These three markets are estimDted the
Central Bank to include 85 per cent of all
remainder representing black market o't)erations which are estimated to
The " offtcial" market derives exchange chtefly fro);, fici;:,lly assessed (a'::"oro) values of exports, and Gover11JY~ental recei:-:,ts; sells for Bessential'! inports av.d €0yernment eXDer~ditures. !1f~Eelf
market derives excbanr.e from excess ~arket values over aforo values, fron Governr:ent m;:pendi.tures and pprsonal remittax~ces; sells I1non-6s sential!l in'_ports, travel and PED'soClal l'6;rr:1. t t811CE' E: •
The "auction'! narket .lerives exc~lange Hoffictal ll n,arl,c;t; Is for "luxury" imports.
-40-
originate 60 per cent from Argentine sources, ho per cent from Brazili.:<n
sources. About 80 per cent of total legitimate exchange transactions
represent operations in the lI official ff market; "free ll market operatiors
account for most of the remainder.
For the time being Paratr1ay will probably haye to retain its
exchange controls (1) as a means of controlling and. allocating impol't.s
and (2) as a r.1ethod of preventin£ Argentine nat:Lonals, in of
A.rgentinats ?resent dollar shortage, from stripping Paraeuayls foreign
exchange and import COI:lr.lodjty marlcets.
Gold and Exchange Ho~dings
Official gold and exchange holdings and liabilities of the Banl:
of Paraguay are shown in tr:e accompc.nyLng table for t:1e yea,rs 19Lo -
September 30, 19h8:
(in U.S. dollar mill:i.on equivalents) II --- .-----,--~ . -- 19T£IJ==
1940 1941 1942 1943 1944 19h5 19h6 19h7 June--- Senr:-.- ....... ""--Gross 2/ 2/ 2/ 2/
Holdings 0.5 3.0 6.8 9.0 9.7 10.6 11.4- 9.6- ll.h- 13.0-(Gold & Exch.) E:::c han ge 3/ y 3/ 3/ Liabilities 0.3 0.3 0,0 0.1 0.1 0.0 0.1- 1.9 3.6- L6-
Net Holdings 0.2 2.7 6.8 8.9 9.6 10.6 11.3 7.7 7.8 3.4
(Gold & Exch)
.... --------------------~-----------------------------------------------------Source: Central Eank of PCirJ.guay
::?araguayls net gold and exchanCB holdings were alnost non-ex-
istent in 19ho (US$0.2 million). FolloV'Jine the c8!1tralization of ex-
chance controls and exchange movements in 1941 they reached ttS;~2. 7 r:.i:_Iion
1/ Converted at, one dollar = 3 guaranies; t:01d holdin~s amount to Uf(; (j.2 million. '£! Excludes contributions to lllF \",-hich at Septenber 1948 (con'td next ~age)
at the end of that year; they then rose c;o"1sistently nntil the of
19h6 (Usjl1.3 million), ;;':'e11 off sharply in J-9h7 to .7, held ~,;"elr
30) and
the next three months took a very real nose-dive (to us~·.3.L D.t
Sel')tenber) •
Dollar holdings have
as a result of dollar exnenditures for electri.c3.1, and tc::-
tile equipment 1;Yhich have exceected US;; 2 JT,i11ion. It v::c:c ind~_cQtcd in
Fnrt .. r,uay thut there c;xiGtcd [:. sur-nIns of in~on'!erti sure
on p:;rgent:Lne peso holdin2s is customar~T, end is currGr:tl~T rmhanced the
necess:dy of paj'lnents on aCcOimt of the r eC0Lt of the
PO';'fer Plant in j,suDcion. A chro::11.0
textile i!JPo:.~ts has been since 191:6.
2. Fcrei[;D Trac'e
Annual elobal l'igtlres for Paraguayl s , .'. ilY"C trade
balance for the years 1933 to 1Ci},.i.7 annear belO'V<T:
Ir;'.ports Exports Ba.!_ar:!C2 (ir<.] "p) ,....,~'";..<.~ */
Year VoiumeValue VolU:J.e ~IUe Cruiin&:1.~.es---50::'.J_2"?S ---""--'''''''-'''*'' -----
1938 106.2 22.9 lho .1~ 21.0 1.9 0.6 1939 118.5 22.1 173.5 23.0 I- 1.0 I- C.) 1940 117.1 26.1 1r:;0.7 19.9 - 6.1 2.0 1941 loS.h 23 .• 3 195.5 26.c.; I- r' "
~) • t.:: I- 1.7 1942 .1 30.0 219.8 28.9 } .1 o.LI 1943 121.8 36.8 262.4 ~r.: !. 1.l f o r'
or' ,/ • '-t - ). J 1944 90.1 ho.o ')',:J Q h2.3 I- 2.3 l- n R {_L+u.v ~./ . \"", 19i6 112.3 jl~. 7 .3 () .9 '£14.3 j }~ .e 1946 91.7 (;6.)+ 387.6 .7 1-16.3 ,.J I
~) ... -~
1947 56&9 66.1 ._23f>.2 65.7 - 2 Gl+ 0.8 r __ -... ___ ._ .--.1 Converted at one dollar ... 3 guaranies. -2/ (concluded from preceding r)age) armmted to US:';i2.2 :::5J1ion and are included i.n the reserves against the currency. 3/ Represents mostly acc1)Jnulating cruzeiro indobtE-Jdness for kytlle p~lr'Chases which Brazil ),<1.11 not settle in sterlinzs and '?iini.guay wjJ 1 Lot settle in dollars.
- 42-
11 Foreign trade figures are officially stated to be valued f .o.b. !:J
Valuation of iu")orts f.o.b., ')resumably exnlains the agp'regate ci.iscY'G-
paney bet;reen the trClde bal3.nces shovm here and shovn1 later in
the Balance of Pcymerits section, though some fJ<lrt the discreyancy
):l2.Y be owing to (~ifferences in exchange rates used.
net trade surplus, 19ho-1947, amounted to the doD.DT of .j.
9 million.
Aside fron the sharp decrease in both ~mr1 imort
vol:lmes in 1947, attributed to the ';.nsett1ed conditior"s, es~;ec::ally in
·the north and east., attenj;;,nt upon the Civiliar, ')0 int of r~rea test
interest i;rhich this 'Jresents :Ls am)arent
terras of trade. The per ton cost of il';')orts, f .00b#1 rose fron a'bout 216
guaranies in 1938 to 724 in 1946 (207 Del'" cent in(!rease), and to 1195
19h7 (407 per cent increase), while the f .c.b., value rtcei'ved per
:,on for e:qJorts over the sa'1le period movec~ 0Lly fro:::n 150 rruaranies in
1938 to 213 in 1946 (hO per cent increase), 278 in 1947 (35 per cent
increase). Par~guayrs , in 1946, cost hE3r C'.bout 2. 3 ti~K;S as r,neh,
:in terT'lS of exports, as in 1933, an(~ about 3 ,.., t •
reflect.s the basica1ly unprocessed nature of s an::' the
absence u'TIong them of c tie? highly strate to ~':artime and inclus-
trial needs, as well, pres1J.laably, as SOlr,e ·~h&.nc:e in the co"Cxls'_tion of
i:;:ports.
!lover;lents of 1Iajor Ex:,ort and I.;:p':lrt CO~:;:l('dities ""- -..............
EXpol~tS. The CO)1;Dosi tion of cAtJorts did not c112nf~e :,ateria11:r
between 1938 and 19h6 (1947 not used for this cOIflnarison because of
Import figures are pr'esu,mably gross of a 5 per cent consular fee applied at Paragu,ayan consulates abroad.
- 43 -
1/ the abnor:tal conditions then .,.,revailing).- In both 193Fl and
brae no , meat proc.ucts Q.;'1d cottor>.. 't"'" .., " • v'a.lue-l[~se products rose {'ro',L
second nIaee in 1938 to first in l')1.!.6, changtne: nlaees ;,;~.t;l •
Quebracho held third place value-wise in bOt;l years, but :'l.n 19L6 sh:::re6
that position with log$ lurnber, which rose from sb;:th in 1. •
Hi\~es and skins in both 1938 and 19'~6 held fourth in v&lue.
Lreakc10vm as t)~.e above is irr1-
?orts, the available data rC,":ard:Lng then b c~.ng (and
vaGue) c6tecor:i ea, ar,d 1)ei';g available
deductions &re
The distribution of tro.de by or (~XD()rt ;-.·:zLrlcet~
2/ COUI1ces
of inports is availD.ule only on a value basis .. -
Expor~~. The Doint of interest in r to o)cr=:'ort
distribution is the extent to which dOl'lL:ates Par:::lGuayl s ex-
port trade through the combinaticr: of direct
those "in transit", i.e.,
These two categories tOE;ether accounted. 47 per of'
f!)t:ports in , 66 per cent in 1<;1+6, and about 75 ·"er CE'mt in 7.
The uestination 0:' the !tin transit,!' categor;y-, in narnal tile, s is
the 1 st sinGle item ncr cent in 19':C.)
~,L.at r:ast
OJ.' exports so clt'sdfied find their ulti:-'"",ate c:estination in the
1/ Y
See See
Table Eo. ~.
l'~O •
7 the 8 ll1 the A;l:Jendix.
•
-44-
Uni ted states, Venez'le1a, Central and &ri tZ,erland.
,. y lirt',entlna '")880S.
Pa;rment
ior thew is nresuued to be ~aQe in
In 1946 the United Kinr:dor;~ too:~ 11.1-1. ner cent of ?ero.,cnayt s
exports, (13 per cent in 1<) 38), o.,nd the states 1~ Der cent (12
per cent in 1938, a record high); but, as :nentioned befo:'e, it is V11-
certain how m:,ch of Para guay t s exports go to the Vni tee1
of the "in transi tf' blind-spot. Ex::,orts to Europe in 1:)33 '.')'ere no-t"
except for France, broken dO'Nn; those to I'rance represe!1ted 2 per cent
of total value.; in 1946 e}'Xlo:~ts to Europe accounted f or about 2.3 rB r
cent.
IY:norts. In respect to in.ports, the y"ar 1'.:1::': i:J.te:;.'vened nore --"-
variously than in the caSt~ expm'ts. ~~rC~~:ltina has l'9tEined '::'irst nlace,
representirlg 32 per cent of tctal ir~o:;,'\ts irl 1938, an(~ h7 ~)er cent i~
at 9.6 cent, 1,'rhieh to secor:cl
(21 per cent). J&)an aLi C-errnan;y, ;,chich if: 1
places (15 cent and 11.4 1)er cent, resl)ective1~r), 1;;·8;"(; 81i, ... eel.
Third place
cent of total imnorts agair:st 1 per cent in 1938.111e
1946 was fourth (7.1 ;)81' cent) and Urucuay fifth 0.1- .)! Der cent).
current econonic activity the United states and E';,rope, p} us pc)S
cODl;;1ercial and political nclicy changes in t he states r88'11 tin:;:
fron the recent eJection ir: tr.e United states, lead to t~le belief that
17 The chronic shortaGe of Arcenti,ne pesos, in ....-iev! of: tl:e O'l'(:t'-E,,11 surplus on peso trade account, 8ufg6StS very large invis:Lble s to Arr-entina.
- 45-
Paraguay may look i'o!'\:'rard to a resul':Dtion of e)..,,})ort valru'1e levels
D.'Jproximating those of 1946 (a.t higher 'Horld "rices III sone insta:1c8s)
for the traditional exports. For exa:lple, a voltt.ile of e'Tl,'Oi'ts
';:;et,-reen those of 191:5 and 1946, multi-p1ied by an aver::q;re Der-ton
proceeds about G90 million, cOln")ared 1iTi th nroccec~s or
]'lillion received in 19h6, unadjusted for increases in freifllt rates oe-
tv:een Buenos Ai res and Ap1.mcion ~
Balance of :Pa~7Jlients " -
Official estirnates of ParaguayT S Dalance of Dayr:ients from 191;1
to June, 1748, based O!~ reign e~:change d:Jta ythicl-, are said
to be abo'.lt 13;; per cent cOf''')lete, are shown tabJ.e IIDa1ance of Pay-
1/ pago 48. ments ll or.
Froxa this table it [iiDearS - that the end of 19Lo to
end of 19)..j.6 Paraf':u.ay accur:mlated Gold and e:{charwe reserves equivaleYlt
to about DS~::13.3 rdllion, and thc.t from 19h6 to JLU:.e, 19!-l.8 rest'Jrves "mrs
dr'l'.m clown by about US'~2.8 million. For the whole Deriod 19h1-.:LUlO, 19Le
2. necative balance US;)).7 rdllion on current account (bxclusive cf
foreign debt service) was nore than offset by al1 csti:1atnc bal-
ance of US:";1).j..2 nillion on combined tal aCCOll1'':1- ,
resultine in a net addition to r:r,ross and exchanre OJ.
million for the neriod. 'rhe dise
1/ 'rhe trade j:igures Shm!::l here are which are not necessarily siTi11'l taneous this reason, as well as bacause the custons allan an f .o.b., Q&sis, the trilrle s ')apents do not correspond Tfi. th those s]:mvn fore-~.gn trade.
cor;.t~r1lacts , F'or
hOllse c:ata are a~r9are.:1tl:r
ir.dicated in triO a~"lr.:e of earlier in tb8 sec~ia~ on
-46-
shown by the balance of payr:lents data aClcL the r'lovenents of foreign ex-
change holdi!1gs of the Central Bank is taken to reflect the lac; botween
exchange contracts and actual chan66s in the ho2.clings.
Han-Trade Current
The "non-trade current" account, which as here e:!{-
eludes service on the foreign debt, has run cOnf]istentl:y
Paraguay since 19hh, thouEh at a reduced rate =-n 1?)~3.
19h1-19h5, r~;ceiDts in th~.s account included sone US"~2.5 to 3.0 niJ.lion
of ;;rants the United states Depal'tment state for SnCA <:nd other
joint United St.~:3.tes-P:.:r2cCll.ayaE
of lend leE\Se. Thf} la"'[,est
sonal reni .J;:,tarlCe[: arid ;:oreiGJ.1
:cn the first hall' of 19LB
revisions t.he e::clta:"ce rate
have sirn.::.ltD.l':.ecusly been :::,edG.cec.
Private Ca~ital
of
funds imported by theLJr.ion 0:: 1 of C.:,liforni.a. Tn l'C'
i tal outfl(Y'f'Ts, it would ar)'oear ei tIler that there is c
derand for such exchange or that S(.)f.i8 restri~tions arE! plE,ced u)on
such movements by the acthori ties. 'lhe sane cv:nea2:"S t.o 1';p true of r'ove ...
rnents of rot urns on tal tn y
Government Credit
The receipts 1 ~, ,~
-47-reflects about uS$6 million from Exim Bank for road construction plus a
part of a Brazilian loan equivalent to US$5 to 6 million for public works.
In the years 1946-1948 receints reflect the remainder of the Brazilian loan
and a loan from the Are;entine Centr?1 Barn: to the Bank of ParaS'J.ay for i::1-
creased capitalization of -1;:.he latter bankt s mortgage departuent. Pa:':.:e'1-':, E
movements in this account indicate the increased cost of foreign :l.ndebt"c:-
ness resulting from (1) the resumption of service on old sterling and C~()~
issues, and (2) the cO;ilnencing of service on the recently cont:r&sted de·;-;:.E'.
Foreign debt costs are expected to increase further to ai)ou.t US~)3.~; "liJllon
per :>rear for the next three or four years, and then to falloff to about 1/
uS~2.5 million annua11y.-
From the above ta~le and the foregoing discussion it (1)
that in effect nor..-recurrent foreign loam:; and grants (totalir;g about [S:::19
million) financed Paraguay! s foreign debt service and accur:1ulation of ex-
change reserves from 19L1 to 1947; (2) that reductions foreign loans and
(,rants since 1944 have to a considerable extent been offset by increases in
foreign equity investment; 0) that since 194(; e;:.,.yorts and ir.mOJ.'ts 1:'\1'e1'e l~ept
b. approximate bet1ance; (4) that effectj ve restrictions aY'e beb.g placed on
current nr::i.vate and official exchange exnendi tures; (5) t>.at £'or8i[;n debt
service C03tS, if not carefully p1anned for, could t.e~ome a source of
potential disequilibr:l:u.lM, in Ilaraguayl s balance of paY'lonts; (6) t'-:at C'Lt'Y'€nt
apparently low exchanf,e alloci.~tions for returns on - . 2/ discouraging to new direct investr::.ent.-
Future Exchanre Prospects •
p~s ?las been nointed out earliel-', tl1e QutJ.oo}: for e~{uorts i11
the immediate future a:;1pears relatively good.
If the Union Oil Cor::Hny C0.1ifornia, vrh:i.ch has a ten-year
1/ Discrepancies betyveen this 8Gtir::ate and pxpenditures for t:1e forei[;n oebt, shown in the "ordinary!! budget, resul ts frOl~: the fact that service on the Braz,ilj.an loan and the old d01h.r loans is provided from especially earmarked tax and other revenues and is not included i:1 the If 0 rri i nary" budget. y cf Table No. 10 in the A0r'endix.
- 48-
Balence of PaYments
(in U.S. dollar million equivalents) 11
... i
TRADE Receipts Payments
Balance
NON-TRADE CU~~
Receipts ,.,1 Payments S
:Balance
PRIV,ATB CAPIT..AL
1941-44-
36 .. 4 39.2
- 2 .. 8
21.4 15.7
f 5.7-
li Recej.pts 2,,0 JJ Payments(Principal) Neg •.
f 2 .. 0
GOV.clRNlviElfr CREDIT OPE...WlONS
Receipt s I:Y Payments
6.4 11 1.7
__ .:#_iL ~~~~ ..
1945-46 1947 Jan.- June 1948
> ...., _ ... 't.~:"'IiF'm,...,.,.. ---:,~
a308 28.] 140 0 7,,1 27.1 13 .. 3
f 6.7 f 1.0 I- 0.7
4.1 3.1 11.4 9.3
}j 2.4 4.3~ 1..3 1.1 O.B 0.0
f 3.2 f 1.6 f 1.3
3.611 204 0.5 2.5 1.5 1.1
,. ---:-:--....-.....,:
1'11.;.1 -~une 1948
~ ..... -.~ .... ,-.-
132~) 126 .. 7
f 5.6
29.8 39.1
10,0 l~J
I- B.1
12.9 6.8 ------ -----~-- -.-~-'--".-.--.. ----- "-'
f 4fl f 1 .. 1 of. 0.9 - 0.6 H- 6.1
OVERALL :BALANCE I- 9.6 t 3.7 - 2.7 - 0.1 1-10.5
IlJCBEA.SE IN GROSS GOLD AHD EX-CHAliGE RBSERVBS f 9,,2 I- 1.7 - 1.8 t 1 0 8 /10,/)
------Source: Central Bank of Paraguay.
Y See also Tables Nos. 9 and 10 in the Appendix. Guaranies converted at the rate of one do!lor ~. 3 guaranies ..
tV Exclusive of foreign debt s~rvice. tut inclusive of returns on private capital.
21 Estimated.
~ Fbreign debt service (interest and amortization).
- 49 -
concession in Para.guay e.nd has spent upward of US $5 million €xplor-
ing in the Chaco, should discover substantial quant:l.ties of oil thAre i
Pare,guayl a exchange problems \'rould be eased.
Ot~er foreign firms are blown to be considering inve3trent
in Paragua.y.
furthermore, Paraguayans 8,re sa.id to hold bale:~;.ces esti't!;~t8'
at many millions Of dollars in Argentina I'md Un,g;uay. It is p!'ota-bly
to be expected that some part of these ~:rill 'be repatrietecl, eSI)ecinll:,;
if taxes, convertibility problems and possi oilities of develuetion in
those countries inersElse And political coned tio:ls in :?Brag',my imIJrove
under tl18 tutelage of the Colorado bl1rt.,~ " .;
T:"li s '.could F t leRst Aase
Paraguay's j\...rgentine peso :!JOSl tion.
In sum, annual exchrnfe receipts for the next fe\'! years
could well exceed those of 1946.
The real exchrmge problem lies in imports. wLic~l in the last
analySiS, under present coneli tions, is the residual iter.; it: ?eI'["-f'~f'~~1 s
balance of payments. Th€' major fector here is goverrlJnent cievel~p;n"lntr,l
imports. The present Government is cormd tted to E;l l)rO{Tcrn 0: (DE jar)
agricul tural and (mhl0r) incustrial development and eX!A:nsion. S'lCt:
a program '!lust be predicayed upon relatively large-ccale imporM of
i::lplements and machinery. Upon the fipeed 1Jt vlhich ':his prog!'&rn CO.1-
tinues to be p'1shed C1nd the lJrecise purposes to \,'hld: it is devoteci,
will largely depend the level Fnel CO!'1position of exch~U1fe holdljg's,
a,nd the internAl :i.nflctionary pressure. This ~t the !'102ent is cuite
problematical; the l'uthorH ies 1']re awere of the problems invol vee" out
the mntter is currently sU-bject, pt least in pert, to noli tic!)l exi£sncies.
1../ Between June Fnd Se:;,Jtecnber 1948 gross eXChclnF:8 holdings dropped US $).3 million largely as e result of such purchases.
- 50-
Government Capital Fl")rmetion Policy
The above situation cannot be regarded as a merely tempo
rary one. The Government may be said lito have fone into the c6pit01~
formation business to stayll, in an effort to fill the gap resulting
from the absence of private investment--both domestic and forei~.
The import requ!remsnts resulting fr·')m this Government policy. COl!:
bined with increasing private import demands as domestic incores riqe t
may be expe;;ted in the foreseepble future to exert sufficient prossure
on exchan€e availabilities from current income to necessitpte the in
definite retention of exchange control mechenisms and to obvl~te the
likelihood of any accumulation of exchange reserves in excess of those
considered desirable for backing the currency, and. 0.5 [' cushion agatnst
the export-import gap.
Convertibility Problem
In Paraguay, as in most other latin Americtn countries, a
current aspect of the exchange situFtion is the pro'blem of inconvertt,..
bility. In Paragueyl S CE'se this pro'blem attaches primp4rily to s;;erling:,
since Paraguay regularly has 9 favorabll3 balance in its sterllng trans
actions, whereaS the balances wi th Argentina, Brazil and the "Cni tsd
States, currently the largest sup=,liers, are unfavornble. In some
measure the sterling belances may be applied R€,ainst the accounts \"ith
Ar{':entina a..l1d Ere.zil t though the degree of tnis use (..f sterling has
apparently 'been considera'bly reduced. Paraguay! s sterl in€, balances 9.t
June 1948 probably represented some1llhere around a third of total gross
exchange holdings. Any easing of the converti'bility problem "rould
thus 'be of me.jor assistance to Paraguay.
- 51-
DevalUEtion
There was apparently no thought of unil~teral dev8lULtion
I"t the time the Nlssion was in Parag'J.flY. The present moneter;? a:'.lthor
i ties ere proud of their new moneta.ry mechanism; they lock "'!l th e;:tre::c:e
distaste upon Paraguay's previous ~onetary history; and they put graE'j
faith in the ten6ts of the Internr'tior.al r'~onetery Fund. It waS the
J<:ission's feeling- th8t t~ey will avoid unil&.teral develul"tion if the:'
possibly can, using exchange controlS rigorously to tha.t endJ
Al though price and wage indexes in Pa.raguay hE .. ve ri sen ra:pidly
in the last two yee.rs, it is to be recalled th[Jt bottl indexes apply to
Asuncion, 'lrlhere~.s the bulk of exports are produced in the outlying
areas where payment in kind and in services is still probably ffi"17e
important than Monetary "lages, and It!!ler8 the socj.al organizaticn is
still largely feudal, so that monete,ry production costs \·..-111 or .. l~r riSe
a.fter some time lag.
The answer to the possibility of unilateral devaluctio4 ap
pears tc lie chiefly in the effectiveness of exch~nge control admin!s
tretion, the spee.d of the present Government's capitAl for~'1etionpolicy,
and the degree of fre~.ght rate increases (over 1l'hich Paraguay has cur
rently little control). It is too soon to be r:.ble to aSSe8S RCC~lratel:T
the net effect of these several forces. In the event of an iirgentillfl
devaluI:tion, the impact upon Paragu8Y ,,·lould. be attenuE;ted t despite
Argentina's important poai tieD among Par?g".lf'yl s export rv:arl::ets I by the
facts (a) that !'l"I4ch of Paraguay I s exportction faces !~ present seller! s
market I (b) that pa,rt of Paraguay I s exports do not parallel those of
Argentina and (c) that Paraguay is making strenUolls efforts to extend
-52-
and intensify its overseas morkets. If the present selle~ls market
were unexpectedly to shift to a buyer1s mnrket. Para~~ay might not ce
able to avoid follo'lIing Argentina into dEl''O·aluation.
4. Foreign Invest~ent
A rece'!lt study of foreign :investtlent in PeraEUsy compilel
by United States ['uthorities estimt"tes that s'J.ch investment in lr;'+l
amo'll1lted. to 8bout the eouinlent of US $60 million, of \'ihich about 44
per cent was Argentine, 30 per cent United Stetes, End 22 per cent
British, the rempinder being e.nparently divided mostly bet"reen .Brazil
B.nd Switzerland.11
The ls.rge discrepancy between the totel of: foreign invest-
menta and the total jnvestment in industry show:t in Table 3 (eq1.liv'c.le;.).t
to about US $44 million) reflects, at least in part, the inclusicn
among foreign investments of Ntilroad, banldnr. comnercial and. ?'g1"i-
cultural enterprises which are not included in the census of prlncipal
"industries".
5. Foreign Debt Pecord
Until 1941 Para,guay's forei€.n c'Lebt record had been tad,
but behleen then and 194L~ adjustments of the three outstanding debts,
one dollar. the others sterling. vlere ree.ched. and these debts ht:'ve
been serviced regularly Since 1942 Bnd 1945. respectively. It should
be noted that f~om 1941 until 1946, inclUSive, P8re.guay was a~~~ulat-
ing foreign reserves t both a.s a result of i,·rart:ime shortpges of B"V'ail-
able impor"te and of new foreign c'!"edits and gifts, and that se:::vice
1/ See Table 11 in Appendix.
- 53-
on the major portion1/of her foreign debt is just now commencing.
The Mission ,iaS told, repeated.ly and emphFticdly, thnt exch&n[,e for
foreign debt service has bnd vIill hflve top priority among exchan€:~e
alloc8tions.
The total foreign debt At the present time amounts to 8.p-
proximp.tely US $28.6 million. Estimated annual payments for the ne::t
four yea.rs. beginning in September 1948, vdll HmolXlt to ,:;'bout US $3.5
million. thereafter falling to l'ltJQut $2.5 million.1/
g/
I. e., the Brazilie'cU loan, the Ar&'entine loan to the Central Eank, and the d~bt to Arg:entina resulting from the netio:r~l?lization of the pOi'ler plant in Asuncion. See TAble liTo. 12 in the Apl!endix.
:.t!able No.
1.
2.'
6.
7.
s.
10.
11.
12.
STATISTICAL APPENDIX
Agriculturall?roductiop-, 1938-.1947
Census of Principal Industries
Capi tal Investment in Principal Industries (According to Balance Sheets) and Net Income Produced in 1946
Aggregate Private and Public Loans and Discounts of the Banking System. 194~l947
Federal Expenditures
Public Debt
Maj.or Export Products, Volume and Value, Selected Years 1938-1947
Value Distribution of Exports and Imports by Countries, 1938 , 1946, 1947 .
Balance of Payments, 1941-June.1Sl.t
Balance of Payments and Accumulation of Ex:change, 1941-June 1948
Foreign Investments in Paraguay, 1947
External Debt and Service of Paraguay
Table 1
PARAGUAY
AGRICULTURAL PROnUCTION, 1938-1947
(thousands of metric tons)
Year Tobacco Yerba Sugar Unhusked Raw Corn :Beans Peanuts Cassava Sweet Alfalfa Potato Total Mate Rice Cotton Potato . __ ._--.. -.,--_.
1938 7.3 12.4 210.2 4.6 23.3 83.0 19.7 10.0 571 .. 6 77.4 4.2 0.8 1029.5
1939 7.;5 15.2 225·2. 5·5 18,,9 93·0 20.0 11.2 659.5 79.5 5.0 1 .. 1 1142.4
1940· 6.2 18.4 233.1 3 .. 2 18.5 11400 21.0 17.6 738.7 81.2 6.2 1.3 1259.5 1941 6.9 14.4 281.2 5·:; 19.2 70.0 13.9 9.1. 684.8 78.7 3.6 0.6 1188.3
1942 7 .. :;. 19.9 231.7 9.4 21.2 125.0 19.1 10·3 741.2 81. '1 5 .. 5 v.8 1273.1
1943 7.2 17.6 176.:; 10.3 25.4 111.0 16.9 12.7 825.4 '10 .. 3 9.3 1:'5 1283.9
1944- .5.6 16.6 1'11.8 10.1 47.'1 118.9 17.7 10.9 '133.5 '16 .. 0 10·5 1.0 1220.3. 1945· 8 .. 5 13.5 188.6 7.3 26.9 101.2 16.7 8.6 66'1.9 62.5 9.8 1.3 1112,,8
1946 11.3 15.4 321.2 7.9 34.4 105.7 25.8 13.9 810.0 71.8 9.1 1.3 1427.8
1947 12.8 10.0 289.7 4.9 35~7 104.9 34 .. 9 19.3 1239.4 97 .. 9 8.4 2.1 1860.0
Source: . Central Bank of Paraguay
Table 2
PARAGUAY
CJlNSUS OF PBIl:jCIP.AL IlIDUSTRIES
-= V~ue o~f Output ({'~lOOO _g1J~~;~:s) 11 No o of
Industry Estab- No. o! lish- Workers 1945 (Gross) 1946 ments
- ............. -Meat and Bides 3 2,170 31.8 Other Foodstuff~ 564 3,614 55.7 24.7 Tobacco 9 186 4.0 6.0 Beverages 96 706 6.8 f! c' .. 0
Cotton Textiles 7 3.5 4.7 Other Textiles 6 8.9 13.0 Tannin 4 6.8 r:: 6 1..1"
Lumber 60 7.8 7Q 4
Timber and Charcoal 134.2 153.1 Chemical and
Pharmaceutical Products 87 539 5 .. 9 10.1
Bricks 250 1.7 1.1
Other Construction Materials 193 1,130 2.1 1.7
Leather Manuf. 50 413 3.5 3.5 Leather Tanning 60 224 1.4 1.6 Peper Manuf. 1 3 0.1 0,,:"
Total 242~4 293.2
Source: Central Bank of Paraguay. Paraguayan Industrial Urdon.
Y One dollar w 3.09 guaranies, at par.
Note~ The data on number of establishments and nurdber of T!!orkers are extremely defective and leave out figares concereing '1,ihich there a:)parently is, on the part of the authorities, some doubt, but which, rel::l.tive to totals in those categories, are extremely significant. Therefore, no totals are given.
Table 3
PARAGUAY
CAPITAL INVESTVIEl\lT :m PRINCIPAL INruSTRIES (ACOORDING TO BALANCE S".l:IEETS) AND NET INCOIv'.E PROruCED IN 1946 .
(millions of guaranies) 1I
Industry
Textiles
Meat and Hid.es
Yerba Mate
Lumber Product s
Q,lebracllo E:!tract
Industrial and Vegetab~€ Oils
Petit Grain
Wheat Milling
Rice Milling
Sugar Products
Cigarettes
Beer
Electric Energy
Total
Source: Central Bank of Paragu~.
Y One dollar "" 3.09 guaranies, at par.
Invested Capital
16.6
23.1
12.1
14.0
30.1
8.9
1.7 4.8
1.3
5.1 2.2
3 .. 8
7.2
130.8
Net Income Produced
1946 (Value Added)
3.5 7.0
1.0
2.0
3.0 0.3
2.5 0.6
0,3
2.0
§} Produced income is estimated on the basis of total operations in the country, whereas invested cepital p:i."obably refers to processiIig plallts, which as noted eal'lier, represents but a SIr.all part of the ca1)i tal involved in lumbering operations.
Table 4
PARAGUAY
AGGREG.i~E PRIV~ AND PUBLIC LOANS AND DISCOUNTS OF THE BA1"'KING SYST.ElJl. 1946-1947
(millions of guaranies) Y
Category December 1946
~'iculture and Stockraising
Industry
Electric Power
Construction
Conmerce
Public Service
Official Industrial Enterprises
Banks and Finance and Insurance Companies
Miscellaneous
Total
Source: Central Ba..."lk of Par~~ay.
Y One dollar ;;;: 3.09 guaranies, at par.
6,940
9,460
7
7.954
10 j 640
2$117
21,038
310
59,773
Dacember 194"r
6,260
12,926
15
7.343
10,932
2,958
32,976
2.559
-
Table 5
PARAGUAY
FEDERAL EXPElJDlTURES
(millions of guaranies) JJ _ .. v ___ ;
1941 1944 1947 1943 Presidency 0.6 Congress 0.4 Min. of Interior 1.8 2.7 5.0 7.1 Min. of Eoreign Relations 0.5 0.8 1~4 2.J Min. of Finance 0.8 1.4 3.1 3.7 Min. of Education 2.0 3,3 6.3 7.3 Min. of NationEl Defense 447 9.4 1506 17~9 Min. of Public Works and COlr.J:nur~ications 001 0.9 1.1 1.4 Min. of Public Health 0.5 1.1 3.2 3.2 Min. of Economy 0.7 0.,8 1.6v 2.3 Judicia..7 0 .. 3 0.6 0,9 1~1
Public D:lbt gj lInterest, Commissions
12•2 14•7
2,,0 2,,5 Amortization 5.1 11.,9 other 3.2 8.1
Public \1orks 0.4 0.5 0.5
Total, Ordinary Budget 14.1 25.5 49.0 70.4 Ministerial Overdrafts - 0.3 0.5 Special Budgets 3.0 1.7
Total, Federal Budget 14,,1 25·5 52.3 72.6
Autonomous Ent it ies 3.1 0.5 1.7 3.0 4.7 Special Obligations Ji 2.0 4.6 3.9 3 .. 0
'rotal t Federal E:~endi tures 16.7 31.7 60.2 80.3
SOUl.'ce: Central Bank of Paragu.a;{; Ministry of Finance.
y One dollar ... 3.09 guaranies, at par.
gj Breakdown data are not available for years preceG.ing 1947. Y These expenditures are covered by especially allocated revenues.
Note: The difference between the 6U.l$of the individual items and the totals given is the result of the l'ourJ,ding process.
Item
EXTERNAL DEBT Special Obligations
Total External Debt
INTERNAL DEl3T
Funded
l'loatlng
Total Internal Debt
OTHER GOVEENMENT INDEBTEDNESS
Interest Due and Unpaid
Interest Payable
Oredit Operations
Total
TOTAL PUBL 10 DEBT
1942
25,144 6,414-
31,558
27,377 4,009
31,386
3,713
2·583
6,296
69.240
Table 6
PARAGUAY
PUJ3LIC DEBT
(thousands of gua.r~nies) ~I
1943
27,091 6,365
33,456
29,862
),854
33,716
:3,784
3,980
7,764
'/4,936
1944
32.613 1?,085
42,698
30,117 4,311
34.428
4,043 190
3,717
7,950
84,076
1945 1946 1947 31/8/48
38,967 41,103 6,244 6,080
45,211 47,183
42.117 6,080
.--
48,197
37,573 36,730 48.521 4, 417 417
42,316 37.147 48.938
2,490 2,820 2,621
- --1,453 361 1,123 . 3,943 3,18]. 3,750
. -'-~".,~------,
91t47q ___ !?7 .511 .I
10~,885 •
69.1:33 6,080
75.013
44,543 417
44,960
2,629 467 4'13
3,569
12].542 ~ &i t* ~::::z».$4.tIi;.r, sq-,! :;:4N2S'i;r= :;n: ~:..=:;:::;:r.:::zz:a""'''''',,!,,--'''''-------------
Source: Oentral:Bank of Paraguay.
1/ One dollar D 3.09 guaranies, at par.
Yerba Mate Sugar Products ~uebracho Extracts
Hides and Skins Fruits Tobacco Logs and Lumber
Essences (Petit~ grain)
Vegetable Oils Cotton
Meat Products Other
Table 7
PARAGUAY
VJWOR EXPORT PRODUCTS, VOLUME Al'TD V.\LUE. SEX,EC'l'ED Y1'iARS-1938-l947 I - 1
(volumes in thousands of metric tons; values in millions of guaranies) --
Volume
4.6 0.1
36.8 7.8 4.3 2.7
52.6
0.1 0.8
9·5 13.5 7.5
193 8
% Value
3~3 0.1
26.2
5.5 3.1 1.9
37·5
0.1 0.6 6.8 9.6 5.3
1.5 0.03 3.9
2·5 0.1
0.6 0.7
0.6 0.1
5.6 5·1 0·3
% '7<-1 0.1
18.5
11.9 0.5 2.9
3·3
2.9 0·5
2b.6 24.3 1.4
1 9 4 6 -----~.--.-----------------Volume %
I Value % Volume -----------------"------
7.0 1.0
48.3 10.8
3·3 7·3
248.1
0.5 4~4
14.6
26.3 16.1
1~8
0.2 12·5
2.8 0.9 1.9
64.0
0.1 1.1
3.8 6.8 4.1
2.7 0.6
11.8
9.3 0.4
6.4 11.8
3.8 2.1
13.1 18.2
2.4
3,,3 0.7
14.3 11.3
0.5 7.7
14.3
4.6 2.5
15.9 22.0
2.9
4.2 2.4
.1
8.3 2.2
3.4 158.3
0.2 3.9 8.0
12.2
10.2
194 7 % Value
1.8 1.0 9.8
3.5 0.9 1.4
67.0
0.1 1.6 3.4 5.2 4.3
1.9 1.5 8.7
11.2 0.4
3·3 11.3
2.1 3.13
10.2
9.3 2.0
% 2.9 2·3
13·2 17.0
0.6 5.0 7.2
3.2 5.8
15.5 14.2
3·1
Total 140.3 1\)0.0 21.03 100.0 387.7 100.0 82.6 100eO 236.4 100.0 65.7 100.0
Scurce: Central Bank of Paraguay.
11 One dollar - 3.09 guaranies, at par.
Table 8
PARAGUAY
V.~UE DISTRIBUTION OF KXPORT8 Alm IMPORTS BY COU1TTRI~S. 1938, 1946, 1947
(thousands of guaranies) 1/
1938 1946 Exports Imports Exports Imports Imports -----
Value "% ,Value % Value % Value % Value % Value %
Germany 2,993 14.2 2,618 11.,4 Argentina 4,494 21.4 8,750 )8.2 20,997 25.4 31.572 47.5 26,594 40.5 23,684 34.8 Argentina
in Transit 5,404 25.7 34,685 41.9 22,604 34.4 United Kingdom 2,739 13.0 2,204 9.6 9,431 11.4 4,724 7.1 6,345 9.7 4,114 6.0 United states 2,573 12.2 2,191 9.6 3,315 4.0 13,799 20.8 1,422 2.2 19.890 29.2 Ul"Ug\1aJ" 294 1.4 582 2.6 6,290 7.6 2,927 4.4 4.794 7.3 1,718 2·5 Uruguay
in Transit 4.645 5 .. 6 2,616 4.0 Brazil 4 0.0 240 1.1 125 0.1 9.707 14.6 8 0.0 10,134 1/-1-.9 Sweden 17 0.1 176 0.1 163 0.2 756 1.1 868 1.3 Switzerland n.a. n.a. 21 0.0 619 0.9 1 !l.0 1 • .562 2·3 Belgium n.a. n.a. 996 1.2 239 0 .. 4 13 0,,0 1,425 2.1 Japan 3.419 14.9 n.a .. n.a. n.a. n.a. Norway n.a.- n.a. 151 0.2 86 0.1 123 0.2 277 0.4 Holland n.a. n.a .. 1,292 1.6 70 0.1 554 0.8 171 0·3 Italy n.a. n.a. 358 0.4 28 0.0 161 0·3 627 0.9 France 422 2.0 360 1.6 101 0.1 23 0.0 246 0.4 494 0.7 Others 2,087 9.9 2,354 10~0 1'D9 0.1 1,840 2.8 222 0.4 2,122 4~6
Total 21,030 22,894 82,679 66,389 65,703 68,087
Source; Central Bank of Paraguay.
11 One dollar - 3.09 guaranies, at par.
Table 9
PARAGUAY
BALANCE OF PAYMu\!TS, 1941 - JUlJE 1948
(in U.S. dollar million equivalents) Y
1941-44 1945-46 1947
RECEIPTS
Exports (f "o.bJ. 36.4 53~8 28,,1 Non-Trade CUrre~~ 21.4 gj ~.1 sf 3,,1 Private CaEit~ 200 4.3 2.l+ Government Credit
QPerations 6,,4 3.6 2c 4
TOTAL RECEIPTS 66.2 65.8 36 .. 0
PAYMENTS I!Eort s (co iof e} 39.2 47.1 27 .. 1 Non-Trade Current
1..] sJ 2.5 sJ ---Foreign Debt Service 11>5 Other Government 1.4 0.9 1 .. 8 Other 12.0 9<1 6.2 Total, NM-
Trade Current 15.1 12.5 9.5
Private Capital V 1.1 :J Capital Neg. 0.8
Dividends, etc. 2.3 1.4 103 Total, Pri-
vate Capital 2.3 2.5 2.1
Tom PAYIJillNTS 56.6 62.1 38.7
RECEIPTS SURPLUS (f) of 9,,6 t 3..7 -. 2.7
Source: Can tral Bank of Paraguay.
!I Guaranies converted at 3 guaranies per dollar.
EI Est imated.
Jan .• - June 19i8
14.0 1 .. 2 1.3
0.5
17.0
13.3
1.1 0.,8 1.7
3.6
0.0 0.2
0.2
17,1
- O.l
---~-
1'4IU -June ~ ] S~)! g
Tot:.'l ---,. -".~- , .... -
132,,3 29.8 10.0
. .!.?9 185.0
126.7
6.8 .4.9 29.0
40.7
1.9 5.2
7.1 "-
174.5
f 10.5
Table 10 Source: Central Bank of Paraguay. 11 One dollar; 3.09 guaranies, at par.
PARAGUAY
BALANCE OF PAYl'lEl~TS Al~D AGCm;-U:LATlON OF EXCHANGE, 1941 TO JUNE 1948
(millions of guaranies) ~I
1941 1942 1943 1944 1945 1946 1947 June
REOEIPTS Exports 15 ... 00 23. 64 .16 44.25 69.65 91.82 84.19 41.94 Oapital Movements
Government Oredit Operation 3.40 4.65 4,,96 6·37 4.68 5·99 7.38 1.48 Pri va t e Oapi tal n.a. n.a. n.a. n.a. n.a~ 10.77 7.18 3.94
Other Receipts 12.21 16.20 24.52 17.29 7.16 7.16 9.36 :.60
Total Receipts 30.61 44.49 55.64 67.91 81.49 115.74 108.11 50.96
PAYMENTS Imports 18.63 22 .. 89 28.74 47.31 60.08 81.24 81.16 39.98 Current
4:;; } Foreign Debt Service { n.a. n,a. n.a. n.a. 3.90 4.32 3.39 Other Government 0.86 1~48 3 .. 37 3.36 1.60 5·38 2.42 Family Remittances 1.04 1.41 1.20 1.32 1.56 2·33 3.04 0·39 Tourists and Foreign Study 0.89 1.46 2.92 4.77 4.69 6.49 7.99 2.39 Amortization of Personal Debts Abroad 0.64 1,,03 7·39 0.95 0.56 3.23 4.}0 0.99 Communications and Other 1.39 3.52 2.00 4,,12 4.83 3.40 3.61 1.1:2
, To tal Current 4.82 8.90 .88 14.52 1h.56 20.95 28 .. 64 10.73 Oapita1 Movements
Capital i n.a. n.a. n.a. n.a. n.a. ~ 3.19 Dividends 0.08 1.42 2.23 2~22 1.86 2.4
Total Payments 23,,53 33.28 47.85 64.78 78·50 107.83 116.15 RECEIPTS SURPLUS (/) /7.08 -1-11.21 /7.79 f3.13 /2.99 /7.91 -8.04 Mo~rnNTS of Gold and Foreign Exchange
Holdings (Gross) /7.6 /11.3 /6.7 /2.1 +2.7 +2.5 -5.4 +5.1 If.NT MOVEMENT of foreign Excr~nge Holdings, 1941-June 1948 .[::,2.6 NET RECEIPTS SURPLUS, 1941...June 1948 +.11.0
Table 11
PARAGUAY
FOREIGl~ Il:VEST/:;[ii;NTS IN PARAGUAY - 1947
(millions of guaranies) Y
ARGEi.~TIUA
Qp.ebracho Public Utilitias Agri~~ture and Cattle Mate Banking Brewing Textiles Other
Total
BRITAI~
Railroad Agriculture and Cattle !vleat Packing Banking Other
Total
mUTED STATES
Agriculture and Cattle Petroleum Exploration q.u.ebracho Vegetable Oil Petroleum Distribution Meat Packing Other
Total
BRAZIL Banking Other
Total
OTHER FOREIGN
TOTAL FOREIGN
Investment
30.0 12 .. 0 l3aO 8.0 5 .. 3 1.5 1 .. 2 9.0
80.0
33.7 10.0
5.0 1.1 4.2
1;4,,0 ."
11.7 9.0 8.5 5·2 L .. 5 1 .. 3 1.8
39.0
207 0.3
3,,0 4.0
180.0
Source: U.S. Embassy Report No. 59, Asuncion, 1:;[;l'ch 19, 1948. Y One dollar ;-:: 3 .. 09 guaranies, at par"
Per Ce::1t of Total
l.i4.4
30.0
21.7
1 .. 7 2 .. 2
100.0
Table 12
PARAGUAY
J1IX!1$BliAL DEbT AHD SERVICE OF PA...1iA.GUAY ~ 11 (thousands of dollars)
,--.-~----- ---.- ._-_.-1948 194~ 1950 1951 1952 F';;;';~
Sterling Bonds ~ i~~~96 ..... ,J.",. ../
Principal Outstanding 2,O~0 1,794 1,479 1,145 792 ~?3 ..I--
Principal Payment 1 8 157 167 177 134 '1 ;)i;
Interest Payment 63 54 44 34 24 ·16 Total P~eat 211 211 211 211 158 141 .-
Brazilian Debt Principal Outstanding 7,426 6,631 5,835 4,858 3,882 3,558 Principal Payment 796 796 976 976 324 324 Interest p~,1Il1ent 286 256 227 13.1 155 142 Total Payment 1,082 1,052 1 i 203 lJ107 479 466
Argentine Iebt gJ Central Bank
Principal Outstanding 2,205 1,960 1,7~5 1,470 1,225 980 Principal Payment 245 241=; 2~ 245 245 245 Interest Payment 83 7~ 6~ 55 46 37 Total Paymerlt 328 319 309 300 "'0" 282 C:j.J.
Private Debt (Utilities) 21 Principal Outstanding 9,800 8,820 7,840 r I'" 0,800 5,830 4,900 Principal Payment 980 980 980 980 980 980 Total Payment 980 980 980 980 980 980
Dollar Debt E7pcrt-!mpo:~~ ----Principal OJ.tstanding 4,697 4,192 3 1=)""8 2,898 2,':39 1,399 '(;' Principal Pa.yI1ent 500 614 80 559 W:~O 392
Interest Payment 162 162 13~ 110 89 72 Total PaymBnt \ 662 776 8J.b 659 F?9 4b4
Guaranteed Dollar Debt 4/ .,. .... 0
. Principal ~~tstanding 2,425 2,328 2,231 21134 2,037 1 -l·O ,::J""i-Principal Payment 97 97 97 97 91 97 Interest Payment 97 '>'J: 89 85 81 77 'j." Total Payment 104 190 186 182 178 174
Grand Total gJ 51 -'
, Principal Outst~nding 23,643 25,725 22,678 19r36? 161155 13,800 Principal Payment 2,766 2,S3S 3tl~5 3~034 2~220 2,16a Interest Payment 691 639 560 . 475 335 34 ~otal Pa;nnent _) !.~7 ~""u~.J.~~~_::::::~1..!:o9f_=-_1!~-29 ==-~~ __ ,2,507
J* --~-.-.c:.t=~.. . '. • .. y=-"' ..... :::..::::c::"O:;;:;::--::-:.:· '{~. ;,.~;: (See footnotes on following page)
\ Footnotes to '::able 12
Y One dollar "" 3.12 guaranies.
'# Excludes a loan of 20 million pesos ($4,900,000) existence of 'i'lhicLl is doubtful and no details are available.
On the basis of available data it is assumed that this o.eb·~ is l)a;-:~f,:'e over a five-year period in foreigr.i. currency; there is SO::le reEi;.lO:l'l",O believe, however, th9.t payment may be over four years and that P~llt of the pSiflIlent may be in local c-urrency.
It has been assumed, since infonlle.,tion is not readily available, that these loans bear 4 per cent interest and mature in 25 years,
21 Excludes a Banl\: of Paragu,2Y debt to the ?anco do Brasil of about G 5 million representing t~e remainder of accumulated cruzeiro bclances funded in 1944=-45.