By Daniela Desantis
ASUNCION (Reuters) – Paraguay’s main opposition presidential candidate Efraín Alegre will favor “austerity” to cut public sector spending over raising taxes on the country’s farmers if he wins the country’s April 30 election, he told Reuters in an interview.
Alegre, who leads the center-left Concertación Nacional coalition, is seen neck-and-neck in opinion polls with ruling party candidate Santiago Peña, who is looking to extend the conservative Colorado Party’s political dominance.
Both candidates are under pressure to reduce a fiscal deficit that was 3% of gross domestic product last year, either through reducing spending or increasing taxes on farming, the main driver of the landlocked country’s economy.
Paraguay is the global No. 6 soybean producer, most of which is exported, and a key beef supplier. Soy exports currently face no levies, boosting competitiveness, but the country’s diplomatic ties with Taiwan have closed doors to China.
“We have to put the public budget in order, we have to carry out austerity in the public sector, we cannot simply say if there is a lack of money, we are going to raise taxes,” Alegre told Reuters at his home outside Asuncion.
The broader tax burden in Paraguay was 10.4% in 2022, one of the lowest in the region, but attempts to hike taxes, including on farming, have long faced political and industry pushback.
Peña, the ruling party candidate, has said publicly he wants to crack down on tax evasion and have more people working in the formal economy. He also has shied away from raising taxes.
“It is very difficult for the private sector to feel comfortable paying more taxes if the public sector does not make an effort to properly use the available resources,” Alegre said, citing frequent complaints of bribery and embezzlement.
Alegre has criticized Paraguay’s current diplomatic relations with Taiwan going back over 60 years, which have made it hard to sell soy and beef to China, a major global buyer. He said Paraguay does not benefit enough from its Taiwan ties.
“We are going to solve this based on national interests and of course also based on our alliances in international politics. The current relationship is insufficient, we have a critical position to what we have today,” he said.
(Reporting by Daniela Desantis; Editing by Adam Jourdan and Jonathan Oatis)
