PARAGUAY: Emergencies and Expectations Await New President

By IPS Correspondents Reprint | | Print |

Alejandro Sciscioli

ASUNCION, Aug 14 2003 (IPS) - Paraguay’s president-elect, Nicanor Duarte Frutos, will be sworn in Friday to the highest office weighed down by the country’s economic crisis, endemic corruption and widespread poverty. Even though his Colorado Party has governed uninterrupted since 1947, the Paraguayan people are expecting change.

Duarte Frutos will immediately have to sort out a reduction of the fiscal deficit, reforms of the state apparatus and the social security system, the battle against corruption and implementation of a monetary policy that would reactivate production, say experts consulted by IPS.

While recent polls suggest that the citizenry seems ready to give the new government some time to adjust, the Homeless Movement and peasant organisations are warming their engines to mobilise and lay out their demands for decent housing and for a better standard of living in rural areas.

Two protests are planned that could spoil the festivities surrounding the presidential inauguration, to be attended by at least 10 Latin American heads of state.

Asunción municipal government employees began a strike Thursday in protest against the layoffs of 850 of their co-workers, an "adjustment" that Duarte Frutos himself supported.

Furthermore, some two dozen civil society organisations and leftist groups set out early Thursday for the capital, where they plan to stage a demonstration Friday against what they say is "the criminalisation of social struggles," in other words they say crackdowns on protests are violating their freedom of expression.

The Homeless Movement, which encompasses some 7,000 families in urban areas, and the Coordination Panel of Peasant Organisations are demanding the release of 30 activist leaders who are behind bars.

The organisers announced marches through downtown Asunción and blockades of the city’s access routes, as well as highways throughout the rest of the country, though particularly in the eastern region.

The president-elect met Monday with the social movement leaders with the hope of deactivating the protests, but he was unsuccessful.

As far as economics, the urgent matters are "more or less centred in the fiscal arena, although the biggest problem will unfold in the area under the authority of the Ministry of Finance," local economist Luis Campos told IPS.

Paraguay’s fiscal revenues are stagnant, which will require "a ‘cocktail’ of measures that ensure lower state expenses and an increase in tax collection," said Campos.

Tax evasion jumped from 42.5 percent in 1998 to 73.5 percent in 2002, according to estimates by the Asunción-based consultancy firm Consultores y Asociados.

Currently, the state barely meets its salary obligations for public employees and has stopped paying suppliers and interest on debt.

Another immediate problem is the state reform, because the cutbacks in expenditures "will necessarily involve the reduction of state employees," said Campos.

This could lead to the layoffs of a great number of employees who do not actually work but receive salaries as a result of electoral clientelism – jobs for votes.

If that were to happen, the ranks of the unemployed would swell. Currently, unemployment is estimated at 16.4 percent of the economically active population in this country of 5.5 million people, 34 percent of whom live in poverty.

"To mitigate these problems it is essential to enact specific programmes with external support in order to dissipate social tensions, finding mechanisms for the gradual reorientation of the people who are laid off," explained the expert.

Campos suggests measures like early retirement, "in order to ease the social impact until public spending can be redirected towards public investment, an area that is also practically paralysed."

"Another area that merits immediate attention is the foreign debt," says Patricia Muñoz, business analyst and consultant.

"As revenues stand today, there would be nothing left over to pay the service on the external debt while at the same time carrying out economic reactivation efforts," according to Muñoz.

The weight of Paraguay’s debt casts a dark shadow over the country’s future. It is behind on interest payments for nearly all of its foreign commitments. As of May, the sum owed to multilateral financial organisations – like the World Bank, International Monetary Fund, Inter-American Development Bank – was 2.27 billion dollars.

According to the Central Bank, Paraguay’s gross domestic product (GDP) should grow one percent this year. But the IMF and private analysts say just the contrary: that the economy will shrink by one percent.

In 2002 the GDP fell 2.2 percentage points, the fiscal deficit reached 140 million dollars – or 3.2 percent GDP – and the trade balance deficit topped 606 million dollars, says the Central Bank. In June, arrears in private banking were 30 percent, and 50 percent in public.

One of the few favourable indicators is the slight turnaround in monetary reserves, which grew from 732 million to 781 million dollars from April to June.

Even though they are daily experiencing Paraguay’s worst economic crisis in history, surveys show that many Paraguayans are optimistic about the handover of the presidential sash.

Of those consulted by the Institute of Communications and Art, 62 percent said they are expecting the new administration will perform "well" or "very well".

Eighteen percent of respondents said that the incoming administration would have an average performance, while 13 percent said it would be poor, and seven percent, very poor.

Outgoing President Luis González Macchi took office in March 1999 with positive expectations of 73 percent. But he is leaving office with a 70 percent disapproval rating, according to the same polling firm.

González Macchi underwent the impeachment process on corruption charges, but he survived due to the Senate’s unwillingness to unseat him.

Isabelino Duarte, 53, says, "Nothing could be worse than the González Macchi administration. We don’t know what is going to happen now, but God willing, I hope it is something positive." Duarte has been "taking care of vehicles" in downtown Asunción for the past 30 years, and says he is a faithful supporter of the Colorado Party.

"We expect good things from the new government. I hope that with (Duarte Frutos) Paraguay can improve. My family has always voted for the Colorados," Heriberta Aguero, 59, a vendor whose family income was "destroyed" in the past year, said in a conversation with IPS.

"In these months of transition, there was no indication of what the government-elect can give us. But it is too early to demand to see results," said photographer Christian Núñez, 29, who did not vote for Duarte Frutos.

University student Karina Hermosilla said, "I didn’t vote in the last elections because I don’t believe in politicians. If I had to vote, I would never have voted for Nicanor (Duarte Frutos). He is a sign that nothing has changed. But now he has no other choice but to make good on his promises."

"Nicanor inspires confidence, and that represents economic stability. But we also expect him to follow through on the hardline approach he promised against corruption and crime," said 27-year-old entrepreneur Federico Gamarra.

Duarte Frutos, 46, an attorney by training, won April’s general elections. He will be the thirteenth president from the Colorado Party, which has led this South American nation since 1947, including throughout the dictatorship of Alfredo Stroessner, from 1954 to 1989.