Paraguay's infinite energy bet expires in three years without private competition.

The silent crisis at the heart of Paraguay's energy model dominates today's economic agenda, as three simultaneous pressures converge to threaten a reshaping of one of the structural pillars of the low operating costs that have drawn investment to the country over the past decade.

The warning is stark: according to ABC Color, technicians and analysts in the energy sector are cautioning that the "infinite" energy Paraguay markets as an investment pitch will run out within a three-year horizon unless the sector is opened to private competition. The Administración Nacional de Electricidad is undergoing a leadership change that the business community — led by the Unión Industrial Paraguaya — is demanding be turned into a lever for structural reform, rather than a simple rotation of officials. The UIP has been explicit: it is calling for a state policy that transcends political cycles and halts the substantial losses of the state-owned utility. The balance is delicate. ANDE engineers have already warned they will take legal action if the tariff structure requested by Atome — a British-capital firm whose representatives are accused by the Sitrande union of lobbying from London for preferential terms — is approved. The simultaneity of these conflicts — institutional leadership change, corporate demands for reform, union resistance and pressure from foreign capital — has turned ANDE into the epicenter of a tension that extends beyond the sector itself and strikes directly at the sustainability of Paraguay's growth model.

This energy debate is unfolding while macroeconomic data continue to send relatively favorable signals, albeit with nuances that warrant attention. The Banco Central del Paraguay reported that economic activity grew 5.6% through May, driven by services and agriculture, and market participants are raising their annual growth projections toward 5%. The International Monetary Fund, for its part, trimmed its forecast to 4.4% but acknowledged the strength of Paraguay's economic framework, noting that the country will grow at roughly twice the regional average. The BCP also confirmed that GDP expanded 6.6% in the first half under what is locally termed a "war economy" — a phrase coined to describe the extraordinary fiscal pressure stemming from Itaipú-related debt and its impact on social spending. That President Santiago Peña omitted this concept from his official management report, according to ABC Color, only underscores the political discomfort surrounding the figure.

Public debt is the less comfortable flipside of that growth. In five months, the debt stock rose by USD 1.343 billion, interest payments climbed between 12.9% and 16.8% depending on the measure, and the government is negotiating external credit lines for more than USD 1.6 billion in additional financing while preparing a new Treasury bond issuance. The Ministerio de Economía y Finanzas — which, under new minister Óscar Lovera, opened the week by making payments to veterans, Caja Fiscal retirees and staff at 47 public institutions — faces the classic dilemma of sustaining social spending momentum (up 8.7% through June, surpassing 34 trillion guaraníes) without eroding the debt ratios that underpin its investment-grade rating. The Caja Fiscal reform, whose passage is expected this week with modifications according to Chamber of Deputies president Raquel Alliana, is the most sensitive legislative piece in that balance.

On the external front, Taiwan's foreign ministry has confirmed active efforts to increase imports of Paraguayan soybeans, while Taiwan's ambassador has announced a USD 200 million expansion of financing for the Che Róga Porã housing program. The bilateral relationship — which faces constant pressure from China's economic influence, with Última Hora reporting that Beijing capital is advancing in Paraguay outside diplomatic channels — thus takes on a concrete financial dimension that goes beyond symbolic gestures. In parallel, the country's economic openness remains a differentiating asset: Paraguay exceeds the Latin American and Caribbean average by 27 points on the openness index, and S&P upgraded its sovereign rating at the start of 2025.

The variables to monitor in the coming weeks are precise. The outcome of the ANDE reform will determine whether the government can articulate a coherent energy policy before generation capacity constraints become a tangible brake on investment. The Treasury bond issuance in the local market — where outstanding stock already reaches USD 1.2 billion — will test domestic appetite for sovereign debt in a context where interest rates on public deposits remain relatively high. And the Caja Fiscal reform, if approved this week with the agreed modifications, will set the pace of fiscal credibility for the second half, precisely as the IMF and international markets assess whether Paraguay can sustain its expansion without eroding the structural position of its public accounts.

**Atome (private company, British-origin capital)** — The company faces institutional and union resistance in Paraguay after requesting a tariff structure from ANDE, with the Sitrande union denouncing lobbying efforts originating from England; engineers at the state utility are threatening legal action if the tariff moves forward, putting the operational viability of the project in the Paraguayan electricity market at risk.

**CIRSA (private company, Spanish entertainment and gaming group)** — The Spanish group formally landed in Paraguay with an investment the company frames as an endorsement of the country's legal certainty, consolidating the presence of Iberian capital in the regulated entertainment sector in a market considered to carry low institutional risk within the region.

**Petropar (Paraguayan state-owned company)** — The state oil company confirmed it will not lower fuel prices in July and faces insufficient milling capacity to absorb sugarcane output in the Troche area, exposing the company's operational limitations amid the ongoing debate over the government-mandated reduction in the biodiesel content of regular diesel.