New Paraguay government doesn't plan to renew IMF loan option

New Paraguay government doesn't plan to renew IMF loan option
May 22, 2008 9:17 AM

ASUNCION, Paraguay (AP) - Paraguay's incoming government plans to drop its loan option with the International Monetary Fund, the future economy minister said Thursday.

The announcement by Dionisio Borda is largely symbolic: Paraguay hasn't touched IMF money since 1984 and its economy has been growing. But it follows a trend set by other South American nations including Venezuela, Argentina and Uruguay that have repaid loans or cut other ties to the IMF and other international lenders to show their financial independence.

Under a 2006 agreement, Paraguay can borrow about US$70 million (euro45 million) to stabilize its currency. But current President Nicanor Duarte hasn't used the funds and the IMF says it has had no financial transactions with Paraguay since 1984.

Borda, who also served as economy minister under Duarte, is to resume the post when President-elect Fernando Lugo is inaugurated in August.

Central Bank president German Rojas said Paraguay had reserves of US$2.8 billion (euro1.8 billion)in March. The IMF projects Paraguay's economy will grow by almost 4 percent this year and 4.5 percent next year, adjusted for inflation.

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