World Bank Approves $150m Loan to Boost Business Climate and Jobs in Paraguay

The loan, part of the World Bank’s Development Policy Loan (DPL) framework, is structured around two central pillars designed to stimulate private sector-led growth.

The World Bank Group (WBG) Board of Directors has approved US$150 million in financing to support Paraguay’s efforts to strengthen its business environment, attract greater private investment, and create more and better jobs. The loan, part of the World Bank’s Development Policy Loan (DPL) framework, is structured around two central pillars designed to stimulate private sector-led growth.

Two-Pillar Strategy for Economic Growth

Pillar 1: Improving the Business Environment This component will back reforms aimed at reducing barriers to firm entry and expansion. Measures include simplifying regulatory procedures, improving access to business registration services, and creating a more predictable and transparent framework for entrepreneurs. Special focus will be placed on micro, small, and medium-sized enterprises (MSMEs), which make up the majority of Paraguay’s businesses but often face significant hurdles in financing, licensing, and market access.

Pillar 2: Increasing Private Investment The second pillar promotes the development of public-private partnerships (PPPs) as a mechanism to finance and deliver infrastructure projects and other strategic investments. PPPs are expected to drive investment in sectors such as transport, energy, logistics, and sustainable development initiatives, helping Paraguay modernize its infrastructure and improve competitiveness.

“This operation underscores our strong partnership with Paraguay and our shared commitment to unlock the country’s economic potential through private sector growth,” said Marianne Fay, World Bank Division Director for the Southern Cone. “By strengthening the business environment, we are helping to build a more resilient economy, create more and better jobs, and lay the groundwork for inclusive growth and improved livelihoods for all Paraguayans.”

Key Reform Areas and Expected Impact

The financing will support Paraguay in implementing critical pro-growth reforms, including:

• Easing entry barriers for new businesses through streamlined procedures and digital services.

• Strengthening enforcement of competition laws to ensure fair markets.

• Enhancing investment attraction policies for both domestic and foreign investors.

• Encouraging sustainable and climate-resilient investments in line with Paraguay’s development goals.

The program’s focus on MSMEs is expected to improve their access to finance, formalize more businesses, and enhance productivity, thereby boosting employment opportunities. By fostering a transparent and predictable investment climate, Paraguay aims to position itself as a more attractive destination for capital flows in Latin America.

Financial Terms and Commitment to Partnership

The approved loan is a variable spread loan with a 17.5-year term, including a 3-year grace period. The WBG emphasized that the financing is part of its long-term collaboration with Paraguay to achieve sustainable economic growth and ensure the benefits reach all sectors of society.

By supporting structural reforms, improving market competitiveness, and mobilizing private investment, the operation seeks to create a foundation for sustained, inclusive growth, helping Paraguay diversify its economy and increase resilience against global economic shocks.

The World Bank Group reaffirmed its commitment to working closely with Paraguay’s government to achieve its development objectives, emphasizing that this initiative is a step toward building a stronger, more dynamic, and job-rich economy.