RETURN TO RESTRICTED REPORTS DESK Report No. WH-207a WITHIN ONE WEEK This report is for official use only by the Bank Group and specifically authorized organizations or persons. It may not be published, quoted or cited without Bank Group authorization. The Bank Group does not accept responsblity for the accuracy or completeness of the report. INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION CURRENT ECONOMIC POSITION AND PROSPECTS OF PARAGUAY July 12, 1971 South America Department CURRENCY EQUIVALENTS US$1.00 =126 Guarani () 01 US$ 3.508 $1,1000.,000 -US$7s936.50 CURRENT ECONOMIC POSITION AND PROSPECTS OF PARAGUAY TABLE OF CONTENTS Page Y'o. BASIC DATA .......*..... i-ii SU01RARY AND CONCLUSIONS..u................................... i-viii I. THE ECONOMIC AND SOCIAL FHAMEVWORK .1 II. THE PRODUCTIVE SECTORS ...... ................... 8 A. The Primary Sectors ....................... 8 Agriculture . . 8 Livestock. 14 Forestry ........................ 19 B. Manufacturing Industry ............ 22 C. Tourism ......... 31 D. The Transport Sector e... . 32 E. Electric Power . .37 III. PUBLIC INVESTNIENT AQD ITS FINANCING .39 IV. MONETARY MANIAGF4ENT .49 V. BALANCE OF PAYMENITS ..................... . . 57 A. Recent Trends in the Balance of Payments 57 B. Foreign Trade Policies and Issues .63 C. Export Forecast ... 64 VI. DEVELOP11ENT PHOSPECTS ............67 STATISTICAL APPENDIX Th.-LC report is the result of the economic mission which visited Para- guay li . > ber-November 1970. The mission consisted of Mr. Roger Hipsklnd (Chfw! GLf - 3i, ion), Mr. Carlos N. Ouijano (Deputy Chief), Mr. Gerhard Thiebacn jieneral Economist), Mr. Ari Burger (Agricultural Economist, Ccn- sultant), Nir. Charles Mansfield (Fiscal Economist, DF), Miss Iliana Pastor and Mr. Alfredo Soto, (Transport Economist), M5r. Robert X. Somers (Meat Processing and Marketing Specialist, Consultant), Miss Myriam Suarez (Secretary). An updating mission visited Paraguay in Nay 1971. BASIC DATA Area: 157,052 sq. miles Eopulation (1970 est.): 204 million Rate of Growth, 1960-70 30.4 Gross National Product, 1970: US$577 million GNP per Capita: US$234 Gross Fixed Investment as % of WP(D9L70): 16.7% National Savings as % of GNqP (1970): 15.5% Annual Rate of Growth in GD?: 1951-59: 3.1% 1960-6L: 3.4% 1965-70: 4h8% 1968: 4.5% 1969: 4,0% 1970: 5c3% Output by Sectors,-1970: Agriculture 18.0% Livestock 9. 9% Forestry, Hunting, Fishing and Mining 4.3% Manufacturing 16e2% Const ruction 2 9% Electricity, Water, Transport and Communications 5.0% Commerce 24e5% Housing 3.1% Others 16. 1% Consolidated Operations of the Public Sector (In millions of current Guaranies) 1970: Revenues 14, 545.8 Current Expenditures -11, 7o8-3 Surplus/Deficit 2,837.5 Capital Income 100.0 Capital Expenditures -3, 074.8 Overall Deficit -137-3 Financing 137.3 External Net 17965 (a) Amortization (-892.9) (b) Disbursements (1,072.4) Internal Net -42.2 MLoney, Prices and ExchanMe Rate: Millions ply Cost of Living Index Exchange Rate Millions Current Percent Percent Change /USs Guaranies Change Dec.-Dec. Ernd Year 1967 5,221 3.9 0.6 126,0 1968 5,647 8.2 2.7 126.0 1969 5,937 5.1 -0.9 126.0 1970 6,687 12.6 126.0 Balance of Payments in Millions of U.S. Dollars (1970): Exports of Goods and Non-Factor Services 89,440 Imports of Goods and Non-Factor Services -90,500 Resource Gap -1,060 Factor Payments (net) -7,665 Transfers (net) 520 Current Account Balance 8,205 Donations 2,700 Private Investments 5,500 Long and Medium-Term Loans 15,525 Amortizations -9,465 Short-Term and Other Capital 3,000 Capital Account Balance 16,760 Errors & Omissions -5,555 Net Change in Reserves 3,000 Special Drawing Rights 2,500 Total Net Change in Reserves 5,500 Net IMF Position, Dec. 1970: 6.3 million Conmodity Concentration: 1960 1965 1970 Nteat and Bry-Products 36.6 37.4 33. 0% Wood 18.7 14.9 18.9% Vegetable Oils and By-Products 0.6 6.8 12.3% Foreign Exchange, Reserves, Dec. 1970, Central Bank: Gross US$18.4 million Net US$12.4 million External Public Debt (Dec, 31, 1969): Us$89.5 million (Disbursed Only External Public Debt Service Ratio, 1970: 13.5% SUMMARY AND CONCIUJSIONS 1. The Paraguayan economy grew at an average annual rate of 4.4 per- cent during the 1962-70 period. Paraguay's 2.4 million population is now increasing at a 3.4 percent annual pace and its labor force slightly more rapidly. Economic growth has not been sufficient to provide adequate employment opportunity. Overt unemployment is estimated officially at 6 percent but disguised unemxployment and under-employment--particularly in the agropastoral sector--undoubtedly is severe and wage rates are very low. Inflation in Paraguay averaged 35 percent annually during the "fifties't but has been held to 2 percent amnually since 1960 owing to conservative Government financial and incomes policies and the "openness" of the economy. Although the exchange rate has not been adjusted since 1960, the Paraguayan currency does not appear to have become significantly over-valued owing to relative internal price stability and to the inflation experienced by Paraguay's principal trading partners. 2. Although general internal-external price relationships may have not deteriorated, Paraguay's commodity exports stagnated in the last half of the sixties. Paraguay's small internal market and its dependance on external sources for almost all finished goods make its development singularly dependent upon export expansion. Despite the suitability of its factor endowment for agropastoral and forestry production and its position as a residual world market supplier, Paraguay has done little to exploit generally receptive external markets for wood, livestock and other food products. This is attributable in part to Paraguay's geographic isolation. The requirement of transshipping extra-continental trade in Buenos Aires and of bearing the differential cost of 1,600 kms. of fluvial transport over the Paraguay-Parana-River Plate system has moved Paraguay to specialize in forms of product processing max'imizing final value/weight ratios and in the production of exotic materials for which iritially there was little competition. It has also induced Paraguay to depend heavily on Argentina, its major contiguous market. Thus, though widely diversified, Paraguay's exports have been highly susceptible to such special factors as competition of synthetic substitutesfor beef extract, quebracho extract and tung oil, to limitations on the demand for corned beef and to the cyclical fluctuations of the Argentine construction industry. 3. While production and processing of most of Paraguay's exports may be profitable at present world prices, relative prices within Paraguay reflect the country's economic isolation, tending to offset the cheapness of the labor and land factors and to discourage innovabion and export expansion: owing to the high cost of processing corned beef, prices paid to producers of cattle slaughtered for export have lagged behind prices paid for cattle consumed internally and probably have discouraged herd development; largely because the commercial banking system is geared to financing commercial trading rather than productive activity, working capital credit available to the commodity producing sectors is very scarce and expensive; electric energy costs are several times as high as in - ii - neighboring countries despite Paraguay's greaL hydroelectric resources. Wide fluctuations in producers prices for Paraguay's major cash crops resulting from the paucity of processing facilities and the lack of external marketing mechanimhs have frustrated attempts to assimilate subsistence farmers in the market economy. 4. Economic policies largely have concentrated on the maintenance of internal price stability and on investment in economic and--to a lesser extent--social infrastructure. There appears to have been little interest in ensuring the adequacy of financial resources available to the commodity producing sectors: the sterilization of private resources via the 42 percent compulsory reserve requirement imposed on commercial bank deposits in order to restrain credit expansion has exacerbated the problem of the high cost of commercial bank credit;those t-jblic fTnds which have been made available to the commodity producing sectors have gone primarily into the mechanization of wheat production. There are a number of fiscal and bureaucratic impediments to export expansion including inter-alia: an enormously complicated export licensing procedure requiring some 50 signatures; a system of export taxes imposed in lieu of income taxation which, together with arbitrary valuation of exports for both tax and foreign exchange surrender purposes, treats exporters inequitably and discourages innovation; a system of taxes on cattle transfer which--by virtue of ignoring animal weight--hinders efficient ranch management and discourages the development of one of the country's most important export commodities. 5. There are now some indications that this situation is beginning to change. The Government recently crea'ied an export promotion agency (CEPEX) which drafted legislation--subsequently enacted--creating a series of important fiscal incentives for new industries processing local raw materials for export, is readying a system of drawback and/or duty exemption for imported inputs used in export production, and is pressing for simplification of export licensing procedures and for reduction of taxes on exports. Recently, Brazil has made available to Paraguayan exporters free port facilities at Paranagua to which Asuncion is linked by 1,500 kms. of paved road. Also, the Government of Argentina is now cooperating with Paraguay in improving the navigability of the Paraguay-Parana-Rio Plate system and has relaxed restrictions on the importation of semi-finished Paraguayan wood products (e.g. doors). 6. Sectoral developments are reinforcing these new trends. A 1969- 70 upturn in world beef prices has stimulated the emergence in Paraguay of a number of new frozen beef processors who--by virtue of lower operating costs--can pay higher producers' prices for live beef. This competition for the primary material has moved the traditional corned beef processors-- at least in part--to search for processing innovations that will simultan- eously improve final value liveweight ratios and retain long standing external markets. Consequently, a substantial percentage of Paraguay's 1971 canned beef output is likely to be in the form of cubed rather than corned beef, a significantly higher value product. Mcreover, rising world beef prices have reduced the overall supply of corned beef so that the price of this commodity as well is also beginning to increase. Thus, a rising trend in Paraguayan ranchgate beef prices and resulting imprcvs- ment of incentives for livestock development is irn prosprec+. - iii - 7. In the agricultural sector the Government's two main policy goals have been the resettlement of small holders and squatters living in subsistence conditions on minifundia located near Asuncion and gradual achievement of self-sufficiency in wheat production through a special credi-b program. Although the former program has resettled about 50,000 families, the inadequacy of technical and financial resources available to it and its failure to focus on market creation have prevented it from assimilating these families into the money economy. The wheat program is administered by Paraguay's National Developmen-t Bank (BNF) which, in effect, is the only official financial intelmediary and the only internal source of commodity producing sector investment financing in Paraguay. About 60 percent of total BNF credit expansion during the 1967-69 period was destined to the mechanized agriculture program. Because both mechanized agriculture and large scale wheat production were new to Paraguay as well as on account of administrative difficulties, about half of the investment resources allocated through this program were lost. VWheat yields have not been sufficient to make mechanized wheat production profitable at a support price fixed at the equivalent of the weighted average CIF import price of Argentina and surplus U.S. wheat. However, the country has accumulated valuable experience and probably can make mechanized agriculture profitable if wheat, a winter crop, is alternated with sumner oil crops such as soybean and corn which can be processed for export. However, both in order to consolidate the program within its present dimension and subsequently to expand it, the BNF will need access to substantial public capital resources. Moreover, oil crop processing facilities are already inadequate at present levels of internal production and probably constitute a bottleneck for the mechanized agriculture program and as well as for the assimilation of subsistence farmers into the market economy. 8. The Government is taking some steps to resolve the problems of the agricultural sector. The BNF will be provided with scme additional resources under the terms of a decree enacted in April 1971 which authorizes the Central Bank (a) to advance funds to the BNF in anticipation of Treasury capital contributions, (b) to purchase a substantial amount of BNF bonds, and (c) to make a line of credit available to finance working capital loans to ranchers. In addition, the BNF administration is being improved; the rural colonization prograi is being reorganized with a view to coordinating and improving the application of agricultural research and extension and the agricultural credit facilities of BNF for small farmers. Lastly, the Mtinistry of Agriculture is going to install a system of badly needed regional storage and marketing facilities. However, present Government planning does not focus sufficiently on the development of processing facilities and of export markets for processed crops and steps in this area remain to be taken. - iv - 9. Jes2ite legislaution designed to induce -;he adding of value by proh ifbitir.g: griduaIL2 the eijort of logs, Ihc bulk of Parajuay's forest product e:Pports are in log form so T.hat tlhe country realizes only a fraction of it s *otenUial forestry product e.port ecXhange earnings. Some 60 :ercent of llaragulay s total land area is forested ald about c3 percent of this, in turn, in poienAialy ep)loiVtable uoods, much of them first class hard iwoods. The low exploitation level is attributable at present to the lack of processing facilities capable of integrated utilization of felled timber. Not only are exchange earnings minimized but wood resources are wasted on grand scale such that FAO experts predict depletion of first class wood resources beyond possibility of regeneration within 20 years if present practices are not modified. Entrepreneurs have manifested inuerest in -the rational exploitation of forest resources by applying to international agencies for financing to cover the installatice of appropriate plant and equipment. Also, the Government has drafted much needed legislation creating a forestry service and authorizing it to regulate forest exploitation. To date, howiever, the Government has not produced a program reconciling conservation goals with the stimulation of forest exploitation. Enterprises combining hardwood processing with pine and/or palm heart farming or producing cellulose first from cheaper hardwoods and later from pine might be appropriate solutions. 10. An intensive public sector investment effort--directed to the installa-tion of transport, hydroelectr, telecommunications, water and sewage, public health and public housing facilities--boosted direct public sector investment as a percentage of GDP from the 2.5 percent level during the first half of the "sixties" to the 5.7 percent level during the 1966-69 period. In support of this program, public sector tax and tariff policies increased sector savings from 1.4 percent of GDP in 1964 to 3.9 percent by 1970. Nevertheless, the Government was forced to depend heavily on the support of external lenders for this effort; external loans covered 67 percent of public sector investment during the 1966-69 period. Also during these years, the National Develop- ment Bank greatly expanded its financing of investments in the agricultural., livestock and industrial sectors; annual expansions of BNF private sector credit averaging 1.5 percent of GDP during the period. As in the case of public sector direct investment, BNF credit expansion was strongly supported by external lenders, including not only Government and multilateral agencies but also suppliers of agricultural machinery. The imported capital equipment component of these investments together with increases in finished consumer goods imports associated--inter alia--with the expansion of tourism in Paraguay plus some speculative accumulation of imported intermediate goods imports increased Paraguay's import bill from an average 15.8 percent of GDP earlier in the decade to 17.7 percent of GDP during 1966-69. The external resource gap yielded by these import developments and the above-mentioned stagnation of commodity exports averaged 4.6 percent of GDP. However, since this gap was financed predomninantly by support conceded to the public sector and BNF investment programs on very favorable terms, Paraguay was not required to accumulate - v - an ovenhelming external debt; in 1970 servlce of the ex;ternal public debt amounted to only 13.5 _,ercenlt of ?araguay's goods and non-fac-or services ex)ort earnings. 11. Moreover, in 1970, as indicated, there was already some recovery from export stagnat'ion as a result of increasing world beef prices and the beginnings of a shift by Paraguayan beef processors into products with higher export value/liveweight relationships. This was accompanied by a falloff in finished consumer goods imports resulting from the imposition of controls on commercial bank financing thereof. Thus, Paraguay's net foreign reserves, which had declined gradually but steadily during the late sixties, increased by us$5.5 million in 1970 and were restored to about US$0.4 million from a net negative US$5.1 million as of end 1969. 12. For the future, the Government's Economic Council has recently approved an ecbnomic developrmelt plan fcriaulated by the Technical Planning Secretariat. The plan calls 2or the achievement of a 6 percent average annual growth in GDP over tho 1971-75 period and for a program of public infrastruc tural investment averaging 7.4 percent of GDP anrnually. This plan emphasizes, quite understandably, the necessity of increasing investments in the commodity producing sectors. The objective of raising the growth rate to 6 percent in the medium-term appears feasible in the light of the opportunities which exist for improving the exploitation of Paraguay's agro-pastoral and forestry endowment and the prospects for the continued rapid growth in the tourist industry. However, the projected level of public investment appears somewhat higher than would be necessary to support the target growth rate and it also appears unlikely that a public investment program of this magnitude could be financed simultaneously with the provision of adequate credit resources of the commodity producing sectors. On the basis of historical relation- ships and an overall assessment of the economic situation and prospects, it would appear that public investment averaging 6.4 percent of GDP, together with investment in the commodity producing sectors averaging 15.2 percent of GDP, would be sufficienb to achieve the desired rate of growth. In line with -these projections and the Government's intentions of putting more emphasis on the commodity producing sectors, this report suggests a revised public investment program which could exclude certain proposed projects whose economic justification appears doubtful but would include all major new projects of high priority for which official international financing is presently contemplated. Since the bulk of the public investment program would be devoted to transport, careful selection of new investment starts in this sector will be critical to maintaining public investment at an appropriate level. 13. A major step forward in strengthening the public savings outlook was recently taken when Congress approved legislation reforming the income tax structure which had long been under discussion with CIAP. Public savings, given the present revenue structure, including the new income tax, should grow sufficiently to support a public investment program - vi - ecquivalent to 6.4 percent of GD:' and make it possible to meet the mosc. pressing credi" needs of ihe comrmiodiby producing sectors. Fne Government has also informed CIA1 of its intention of carrying out other tax and fiscal adi iinistration reforms including, most importantly, (a) tile reduction of import duties on luxury goods, (b) the revaluation of real property for tax purposes, and (c) reduction in the multiplicity of special tax exemptions now available. To the extent the Government is successful in implementing these refDrms, additional revenues could be made available to support a higher level of public investment, but the international agencies supporting Paraguay's development efforts will need to keep -the magnitude and pace of their lending under continuous review in the light of actual public savings trends. 14. Tourism has constituted the only dynamic elemnent in Paraguay's export performance over the past several years and rapid increases in gross tourism earnings are expected to continue although at a somewhat abated pace. Paraguay's natural attractions, recently improved road links with Argentina and Brazil, and the resulting influx of middle class automobile owners from these two countries into Paraguay explain this growth. Given proper Government policies both meat products and processed agricultural products exports should also increase steadily in the medium-term and their. favorable impact should be reinforced in the longer term by increased wood products and energy exports. All told, Paraguay's goods and non- factor services export earnings can be expected to increase at an 8.2 percent pace during 1971-76. At the same time, the import component of prospective investment levels, and the demand for intermediate and finished consumer goods imports are likely to increase Paraguay's import bill at an 11.5 percent pace from its 1970 low point if a 6 percent economic growth path is achieved. Although these medium-term trends will require Paraguay to depend substantially on net inflows of foreign savings, the country will still be called upon to improve its own domestic savings performance, i.e. to save an average 27 percent of annual increments in GDP over the 1971-76 period. 15. In addition to covering an external trade gap (i.e. external resource gap) averaging 3.1 percent of GDP over the 1971-76 period, Paraguay should also seek financing permitting it to accumulate an amount of net liquid foreign assets commensurate with the annual volume of its current foreign exchange transactions. Taking into account service on existing and needed new debt, direct private investment trends, needed reserve accumulation and other capital flows, therefore, Paraguay can be expected to require some US$230 million in disbursements from external credits over the 1971-76 period. About US$90 million in such credit had already been contracted as of end 1970 and almost all of the remainder can be expected to be provided in connection with the financing of the foreign exchange component of new public sector investment starts and BNF development programs--assuming satisfactory Paraguayan economic performance. Moreover, just as in the case of financing already in the pipeline, the bulk of required new loans can be expected from the - vii - official international lenders on favorable terms such that Paraguay's debt service ratio- could be expected to decline slightly oveP the medium-term. 16. Projected over the longer term, this 6 percent growth model is demonstrated to encounter no unusual constraints; reflecting the termination of grace periods on already contracted debt and assuming some hardening of terms as the international agencies abandon practices permitting Guarani repayment of dollar loans, Paraguay's debt service ratio would be likely to rise above present levels by, say 1985, but not to difficult proportions. However, 6 percent growth will not yield rapid absorption of the pool of Paraguayan unemployed. After developing production capacity and export markets in the medium-term, therefore, Paraguay should target higher rates of export expansion wlich would permit it to sustain economic growth rates of 7 percent. Cn the other hand, if Paraguayan export expansion were to average only 5 percent after 1970, sensitivity analysis shows that even a 5 percent economic growth rate would be difficult to sustain; given such expor-t performance both Paraguayan employment and external debt would rapidly deteriorate. 17. The Government of Paraguay has made considerable progress in the recent past in stabilizing the economy, raising its savings capacity and creating the infrastructure and institutions necessary to support a more intensive developmen-t effort. But while the opportunity to moire to a more rapid growth path now exists, its achievement will depend In good measure on the Government's success in the following major policy areas: (a) the implementation of an overall public investment program avoiding low priority infrastructural investment and substantial recourse to internal borrowing and providing adequate support for the BNF; (b) the formulation of a BNF program designed to satisfy the demand for investment resources in the agropastoral, agro- industrial, forest industry and tourism sectors. (c) the adoption of a credit mechanism designed to improve the allocation of commercial bank working capital credit to the agropastoral and industrial sectors and to reduce its cost; (d) the elimination of unnecessary bureaucratic impediments to export expansion; and (e) the improvement of its tax system and fiscal administration in line with CIAP (Inter-American Committee for the Alliance for Progress) recommendations. - viii - 15. Tne creation of an instizution dedicated exclusively to e,.ort dromo4ion (CL.), the measures recentily taken &o strengthen the develo, ment bank (BNF), and income tax reform represent important steps forward in carrying out the above described policies, but continued progress along those lines will be required to achieve the growth and development targets announced in the Planning Secretariat Development Plan, 1971-1975. I. ECOulOfIC AND SOCIAL FPPMRAIOTRK 1. According to Central Bank national income accounting Paraguayan GDP has grown at an average annual rate of 4.4 percent since 1962. Pri- mary production--crop and livestock output and lumbering--now accounts for about 32.2 percent of total value-added; construction and manufacturing output--the latter primarily in the form of locally produced raw materials processing--accounts for-another l9nl percent; while-the service sectors make up the remaining 48.7 percent of Paraguayan GDP. At 2.6 percent annually primary production has grown little more than half as rapidly as the rest of the economy in recent years, even less rapidly than has Para- guay;s population. Reflecting in part the large surplus and very low-cost of Paraguayan labor, commerce and personal services have grown at a 5.2 percent annual pace since 1962. The fastest growing sectors have tended to be those financed with public funds including--besides the Central Gov- ernment--construction and basic services. In 1970, Paraguayan GU' is estimated to have increased by 5.3 percent. DOMESTIC PRODUCT BY SECTOR OF ORIGIN (millions 1969 Guaranies) Average 1962 1970 Ahnnual 7 ~ ~% 0 % 7. a Primary 19,362 37;0 23,705 32;2 2;6 Agriculture 10,521 2O.13,261 TI 2.9 Livestock 6,160 12;0 7,287 9.0 1;9 Forestry 2,484 4.7 2,951 4'o 1;4 Hunting and Fishing 44 0;1 128 0G2 14.3 lMining 53 0.1 75 0.1 4.4 Secondary 9 341 17;9 14,104 19;1 5;3 Industry > 11,943 1772 b77 Construction 1,072 2.1 2,161 2.9 8.1 Services 23,574 45;1 35 82h 48:7 5;4 Electricity 292 0-6 612 0;S 9.7 w'Jater and Sanitation 61 0;1 130 0;2 9;9 Transportation and Communication 2,126 4;1 2,496 4;° 4:2 Commerce 12,302 23;5 18,044 24;5 4;9 Government 1,869 3;6 3,814 5;2 9:3 Housing 1,796 3;4 2,280 3.1 3;0 Other 5,128 S.8 7,998 10.9 5.7 GDP at IMarket Prices 52,277 100.0 73,633 100.0 4.4 Source: Central Bank of Paraguay. 2. Paraguay's-rate of population growth is estimated to have in- creased from about 2.3 percent annually in the mid-fifties to about 3.4 percent at the present time. This has come about largely as the result of a sharp decline in the mortality rate, from 15 per thousand in the mid-fifties to 9 per thousand now. The crude birth rate is estimated at 43 per thousand (see Table 1.1, Statistical Appendix). Improvements in public health and sanitation facilities--as a result of the work of the Social Security Institute, Asuncion's Sanitary Corporation (CORPOSANA) and the Iinistry of Public Health (supported by various international welfare agencies such as the Pan American Health Organization)--explain the rapid decline in the mortality rate. Outmigration of Paraguayans to neighboring countries apparently has been a significant population factor although of declining importance in recent years. Paraguay's population is presently estimated at 2.4 million of wihich some 46.4 per- cent are thought to be 14 years of age or younger. 3. Ethnically, Paraguay's population is a very homogeneous one; except for fairly recent immigrations of European or Japanese origin who have settled either in private agricultural colonies in the interior (such as those of the German and Russian-speaking Nlennonites in the Chaco and of the Japanese in the Triangulo Region) the economically active populatini. is almost entirely of the Hispano-Guarani mixture. Guarani together wfith Spanish is spoken by virtually the entire population of Paraguay, imparting to the society a high degree of cohesiveness and singularity within the Latin American context. There has been little rural-urban migration in Paraguay; about 18 percent of the total population resides in Asuncion-- the capital--and another 18 percent in other areas-classed as urban. Since 1960, uitban population growth has averaged 3;4 percent annually compared to 3.1 percent for the country as a whole. Despite Paraguay's average population density of only 5.8 persons per square kilometer, howeve}, the country has experienced a minifundia problem because of the concentrat ,.-i of small holders and squatters in the rural area east and south of Asuncionrt 4. The number of new entrants into Paraguay's labor force presently amounts to about 24,000 annually. Unemployment is officially estimated at 6 percent; a ratio which is shown by the Central Bank to have remained constant since 1962. On the other hand, in the agropastoral sector which employs some 57 percent of the occupied labor force, disguised unemployment and under-employment has been estimated at about 40 percent of the total so that the marginal productivity of agricultural labor, barring extension of the cultivated area which--in fact--is presently underway, is less th-2n the relatively low- minimum vage. A similar situation appears to prevail in the urban service sectors. - 3 - 5. By resolution of the INIational Council of Economic Coordination, the Government establishes minimum wages for all categories of blue and white col:ar workers in great detail.- These wage levels tend to operate as maxima rather than minima, however. Their last adjustment was effected in April 1964; the labor code requires adjustment in minimum wage levels whenever the cost of living index rises 10 percent or more over any two- year period, the index having registered no such increase since l964. Minimum wages currently range from 02,491.90 (US$19.78) monthly (exclasive of food and lodging) in the case of ranch hands to 014,816.94 (US$117.59) monthly for bank-workers with 23 years service. Labor costs not only represent a remarkably small percentage of total costs in most productive activities in Paraguay, but also have not increased over the last six years except to the extent of any improv ment which may have taken place in adherence to minimum wage scales.-I 6. The education attainment level of Paraguay's occupied labor force is low; a-l965 survey showed 0.7 percent having completed university edu- cation, 2.5 percent secondary education and 8.5 percent primary education. The 1962 (last) census showed 20.6 percent of the total adult population to be illiterate. Primary education is free in public schools and primary school matriculations have increased rapidly in the last decade reaching 80 percent of the 7-14 year old age group in 1968. However, primary edu- cation is based on a three-shift system which proffers the student 600 hours of class time annually instead of the more normal 1,200 hours. IMloreover, only 17.4 percent of the children enrolled in the first primary grade in 1962 completed the six-year prim,ary cycle in 1968; the low retention rate reflecting poor facilities and teachers, especially in rural areas, early entrance into the labor force and defects in examination and promotion practices. About 70 percent of primary school leavers are admitted to the six-year secondary education cycle which presently enrolls about 15 per- cent of the respective age group (13:18) and retains about 41 percent of its entrants through the final grade. Secondary school teacher quali- fications are low, the teaching force working almost entirely on a part- time, hourly wage rate basis. Moreover, the secondary system is almost completely devoid of any vocational training facilities. j The Government presently maintains an index of wage rates but only commenced doing so in 1969. - 4 - EDUCATIONAL ATTAINRM.TS OF THE ACTIVE LABOR FORCE, 1965 (Percentage Composition by Professional Category and Total) PROFESSIONAL CATEGORIES Profes- Adminis- lAhite Blue Service Armed Attainment Levels sionals trators Collar Collar Personnel Forces Total Unrversity 21;8 18.9 4.0 0.1 1;2 0.2 1.4 Complete (14;9) (8;2) (0;5) (-) (0;5) (-) (0;7) Incomlete (6.9) (10.7) (3.5) (0.1) (0.7) (0.2) (0.7) General Secondary 51;2 48.9 33.9 4-2 13.6 7.0 9.5 complete (19;4) (20.9) (10;6) (0;3) (2.9) (0:7) (2;2) Incomplete (31;8) (28;0) (23;3) (3;9) (10;7) (6;3) (7;3) Secondary Equivalent 2.5 1.2 0.8 0.2 0.3 0.1 0.3 Primary 24;5 31;0 61;3 95.5 84;9 92;7 88;8 Complete (11;5) (11;1) (12;4) (7.2) (12;7) (12;7) (8:5) Incomplete (8;5) (13;7) (27;2) (38;8) (38;1) (44;1) (36;8` Less than three years (4.5) (6.2) (21.7) (49.5) (34-1) (35.9) (43.5) Source: Esteban Lederman and Arnaldo Silvero: "La Planificaci6n de los Reoursos Humanos en el Paraguay", Centro Paraguayo de Estudios Sociol6gicos. Over the 1960-69 period, consumer prices in Paraguay increased-by about 18 percent or at an average annual rate of approximately 2 percent. Paraguay currently maintains no wholesale price index but national accounts implicit deflators closely parallel movement registered by the consumer price index. This price performance represents a remarkable improvement over the situation prevalent in the 1950's when annual increases averaged 35 percent. Moreover, except for seasonal fluctuations, Paraguay's internal price level appears to have remained constant in 1970. Paraguay's last exchange rate adjustment--which established the current g126 = TJS$1.00 rate--was made late in 1960. Since this same year, Argentina--Paraguay's predominant-trading partner--has effected a five-fold adjustment in its exchange rate. On the other hand, in contrast to the 18 percent internal price increase which took nlace in Paraguay during subsequent years, Argentina's internal price level increased six-fold over the period. - 5 - MOVEMNT OF PRICES ANID EXCHANIGE RATES (Indexes: 1960 = 100) Paraguay Argentina United States A; Exchange Rate 100 484h 100 B. Internal Price Level 118L/ 5822/ 1173! C. A/B x 100 84.7 83.2 85.5 1/ Consumer price index. 2/ GDP deflator, national accounts. 3/ 1holesale price index. 8. Since 1962 investment has averaged 16.6 percent of GDP in Paragua;.. this coefficient tending to increase over the period on account of sharp increases in publJc sector investments in recent years. Exclusive of in- vestment in the commodity producing sectors finahced by the National Devel- opment Bank, public sector investment averaged 5.3 percent of GDP during the 1966-70 period as compared to 2.5 percent during the 1962-65 period; the Government having undertaken very ambitious investment programs in economic and, to a lesser extent, social infrastructure. Thus, main population and economic centers and external entrepotsare now linked by paved roads whereas, until the present decade, Paraguayls only all-weather surface transport facility of any consequence was the railway linking Asunci6n and Encarnaci6n, its southeastern extremity. Although improvemen- in public savings has been impressive, investment recently has been very dependent on the availability of external resources, net inflows of which financed about 26 percent of total investment during the 1966-69 period. This is partially attributable to a downturn in Paraguayan exports which averaged only 13.1 percent of GDP during 1966-69 compared to 14 percent during 1962-65. At the same time, reflecting not only increased imports of investment goods, but also a sharp upturn in imports of consumer goods and some build-up of intermediate goods inventories, total imports averaged 17.9 percent of GDP during 1966-69 as compared to 15.8 percent during 1962-65. Fortunately for Paraguay, the net resource transfer required by these developments has been financed largely by the inter- national lending agencies on soft terms so that the ratio of service on external debt to goods and non-factor services export earnings amounted to 13.5 percent in 1970. 9. In 1970, there was-some reversal at these trends as exports rose to the equivalent of 15.3 percent of GDP and imports descended almost to this level; the-country's net foreign reserves which had been reduced to a negative US$5.1 million as of end-1969 were increased by about US$5.5 million during the year. Improved export performance largely resulted from improved world prices for beef and Paraguayts reaction thereto in the - 6 - form of increased exports of frozen beef and canned cubed beef, a departu.e from the country's heavy concentration on corned beef processing. The import downturn reflected the imposition of controls on the financing of consumer goods imports by the banking system, the previous accumulation of inventories of imported intermediate goods and an ebb in public invest- ment activity. AVAILABILITY AND USE OF RESOURCES (Percent of Gross Domestic Product) ANNUAL AVERAGES 1962-65 1966-69 1970 A. Net Resource Transfer (- = outflow) 1.8 4;6 0.2 Imports of Goods and NFS 1.T 17;7 17$7 Minus: Exports of Goods and NFS 14.0 13.1 15,D B. Available Resources (100 + A) 101.8 104.6 100.2 C. Consumption 86.4 86.7 83.5 D. Investment 15;h 17;9 16;7 Private 12.9 12;2 13.0 Public 2.5 5.7 3.7 E. Domestic Savings (D-A) 13.6 13.3 16.5 Source: Technical Planning Secretariat 10. Although diversified--they include beef, leather, logs and lumber, quebracho extract, edible and essential oils and various other primary and processed agricultural products--Paraguay's exports--like its output in general--are characterized by a very low degree of value-added as well as by great sensitivity to developments in external markets, e.g. the level of construction activity in Argentina, competition from synthetic tanning agents and from substitutes for beef extract, etc. Perhaps, the most important exogenous factor contributing to the evolution--or lack thereof-- of Paraguay's production capacity has been its remoteness from points of embarkation to world markets. Until recently, 1,600 kms. of fluvial transport via the Paraguay and Parana rivers and transshipment in Buenos Aires has been virtually the only method of moving Paraguayran products from Asuncion to extra continental markets. For frozen beef, for example: the additional cost imposed by this transport requirement on shipments to Europe or the United States amounts to about 10 percent of the present FOB Asuncion price. Since Argentina controls the Parana river and the port of Buenos Aires, and has offered Paraguay its major contiguous market, Paraguay has been very dependent economnically on its southern neighbor. 11. Beginning with the building of a bridge over the Parana near IguaziS Falls in the early 1960's, an alternative outlet for Paraguayan products gradually has been developed in Brazil. Now Paraguay enjoys free port facilities at the Port of Paranagua-and a paved road covering the 1,500 kIms. between Asuncion and that port. In addition, recent ocean freight conference rate adjustments bringing ocean transport costs between Paranagua and world markets more nearly into line with those charged on shipments from Buenos Aires have increased the feasibility of Paraguay's use of Paranagua as an embarkation point. On the other hand, Argentina recently has increased its support of Paraguayan devel- opment: cooperating with Paraguay in a UNDP-sponsored study of Paraguay- Parana river navigability; providing a dredge which already has effected considerable improvement in such navigability, and, relaxing restrictions on the degree of value-added in Paraguay accepted bSy the Argentine market, accepting doors fabricated in Paraguay, for examle. Moreover, recent completion of the paving of Argentina's route 11 linking Buenos Aires with Clorinda, across the Paraguay river from Asuncion, as well as improvements in Argentine railway service from Posadas, across the Parana river from Encarnacion, now offer Paraguayan-exporters new options for transporting their merchandise to Buenos Aires. As yet, however, Paraguay largely has failed to organize itself in-order to take advantage of these new devel- opments easing its isolation. - 8 - II. THE PTODIJCTIVE SECTOr&S A. The Primary Sectors 12. In addition to constituting 32 percent of GDP and employing 57 percent of its labor force, agriculture, livestock and forestry also account for about 92 percent of Paraguayts exports (if processed products are included). However, output of primary products has been increasing substantially less rapidly than has population. The bulk of Paraguay's land area is taken up by forests and most of the remainder for livestock raising. Only a small percentage of the land area is cultivated; both livestock and forestry having the signal disadvantage for Paraguay of being very labor extensive activities. DISTRIBUTION CF LAND BY PRRICIPPL USES - 1968 Area Labor Force Value-Added (Has. '000') (%) (%) ( millions) (%) Cultivation 875 2;2 319;2 80;9 11,718 55.6 Livestock i4,849 36;5 36;4 9;2 6,774 32;1 Forests 24,000 59;0 39.0 9.9 2,601 12.3 Other 951 2.3 - - - - TOTAL 4o,675 100.0 394.6 100.0 21,093 100.0 Agriculture 13. Owing largely to the extensive nature of cattle raising, land in Paraguay tends to be held in very large units. In the Chaco, for example, which incorporates some 60 percent of Paraguayls total land area, approximately 90 percent of all land used for farming and/or ranching is held in units of 5,000 hectares or more on which at least 1,000 head of cattle are stocked. As of the last agricultural census in 1956 some 52.2 percent of total ranch and farm land was held by 0.1 percent of the total number of agropastoral operators. A sample survey conducted in 1961--which tallied the number of units but not their hectarage--indicated that this distribution continued to prevail. _ 9 _ TIJ4BER OF FAXIVS AND LAND DISTRIBUTICN - 1956 CFITSUS - 1956 Census 1961 Census No. of No. of Units % Hectarage % Units % Less than 1 6,1422 4:3 4,403 0;03 7,937 4.9 1 - 4:9 62,292 41;7 159,303 0;95 66,122 41:4 5 - 9.9 34,949 23.4 230,207 1;37 37,735 22;5 10 - 19.9 25,192 16;8 316,663 1;88 26,451 16:4 20 - 49;9 12,982 8.7 341,158 2;03 13,700 8;5 50 - 99:9 2,837 1;9 183,260 1;09 3,053 1;9 100 - 999;5 3,391 2;2 997,762 5;93 3,650 2;3 1,000 - 4,999;9 1,015 o;6 2,220,452 13;20 1,081 o;6 5,000 - 9,999:9 259 0;2 1,794,716 10;67 270 0.2 10,000 - 19,999.9 130 0:1 1,786,700 10;62 132 0;1 20,000 and over 145 0.1 8,782,991 52.23 1 06 0.1 TOTALS 149,614 100.0 16,816,619 100.00 160,777 100.0 Source: Central Bank of Paraguay 14. Heavy concentration of land in large producing units may be warranted by Paraguay's natural advantages in livestock and lumber pro- duction. However, those individuals making up the bulk of the agri- cultural labor force must be organized in producing units of a certain minimum size if they are to achieve acceptable living standards. Despite its very low population density Paraguay experienced a concentration of its agricultural labor force as small holders and squatters on minifundia located in the area between Asuncion and Villarica (some 150 kms. to the east of Asuncion). Since 1957, Paraguay's Instituto de Bienestar Rural (IBR) has resettled about 52,000 farm families primarily from this area in colonies located along and above the new road to Puerto Presidente Stroessner, around that town (located on Paraguay s eastern border) and in the general area of Encarnacion (Paraguay's southeasternmost city). Assuming two workers per family, this resettlement affected some 30 percent of the total agricultural labor force. The IBR has plans-for resettling an additional 20,000 families over the next five years. 15. Although the IR itself has provided some financial assistance to these colonies (Creditos de Habilitacion) and investment and working capital credit may have been made available to a few of these farmers by the National Development Bank (BIF - see para. 19) the colonization program by and large has not yet succeeded in transferring former "lminifundistast' from the subsistence into the cash economy owing to the lack of: (a) appropriate colony organization; (b) technical assistance in crop production; (c) effective marketing organization; (d) adequate storage facilities; (e) support prices; and (f) sufficient credit, either to the farmner himself or to the interee:i.aryj who purchases the crcps. - 10 - 16. Paraguayan technicians financed by UNICEF have recently surveye.3 the IBR colonies and have found that while colonists have generally improved their subsistence living standards they have been barred from the money economy owing to inability to market cash crops. Thus, production of Paraguay's major subsistence crops--beans, native corn, manioc and sweet potatoes--appears to have increased more rapidly between 1962 and 1969 than has production of the major cash crops--wheat, soya, sorghum, hybrid Corn, rice, tobacco, potatoes, onions, cotton, sugar cane and peanuts. Improvement of this situation may be expected in the future if the various public agencies involved succeed in carrying out their plans for investment in storage facilities, restructuring the colonies so as to group farmers around a central nucleus from which services can be more efficiently disseminated, and achieving some degree of coordination between agricultural research activities, the extension service of the N1inistry of Agriculture, the local branches of the BNF and the agents of the UBR. To date, however, no plans are being made for mobilizing the credit facilities and marketing mechanism which would be necessary to assimilate resettled farmers into the market economy. The following table provides some idea as to production and internal price trends for Paraguayls principal cash crops. The lack of appropriate price stabilizing and marketing mechanisms is reflected in the inverse relationship between the-supply of and internal prices for many of the items shown on the table. CT-ID G.S T OUTPUT AIND PRIC7S OF PRicII CASJ CROPSJ/ (indexes 1962 =lQ) 1963 1964 1965 1966 1967 1968 1)6) Corn Output 97.2 167.2 170*O 134.0 182.1 1534 123;) Price 122.2 131.7 109.5 127.0 98.4 81.0 142.9 Cotton Output 1221 110.6 129aO 88.9 82.2 92.7 124,6 P rice 98.4 97.4 92.6 77.8 77.8 86.8 74.J1 Onions Output 125.0 152.2 157.3 167.9 189.6 198.9 189.6 Price 88.8 62.6 71.1 73.8 74.3 60.4 64.2 Peanuts Output 93.5 211.2 211.2 217.8 228.0 197.9 178,-1 Price 108.8 114.7 108.1 103.7 91.9 90.4 88.z2 Potatoes Output 103.1 166.6 218.8 229.1 260.6 253-9 264h. Price 122.4 97.0 73.9 81.2 95.2 68.5 72.7 Rice Hlectarage 100.0 114h3 114 3 65 7 102.9 128.6 188.' Output 95-8 119.1 128;6 60.2 107.2 123.2 180.7 Yield 95-8 l4O.2 112.5 91.7 lo4-2 95 8 95-. Price 129.9 123.4 109.3 lo6.5 89.7 96.3 84h' SoybeanJ Output 250 .0 34h4 622;2 690.3 622-2 466-7 762;; Price 95.5 9h.6 76.6 95:5 76.6 73.9 67,6 Sugar Cane / Output 102;7 143.5 147*-5 147-1 147-1 104h2 122-4 Price 97.1 117.6 116.2 95¸6 111.8 107.3 92,6 Tobacco Output 173.7 82.'5 170.2 60a7 93.8 152-5 166-' Yield 104.2 104.2 104.2 104.2 104.2 100.0 10l(0: 1 '-Jrieat is excluded because of the im,port substitution factor. @/ Tlhe Governmrent fixed -minimum prices for sugar cane and soybean as well as for wheat. Source: Table 7.6, Statistical Appendix. - 12 - 17. The internal market for Paraguay's primary products is small so that external markets and import substitution are essential factors for Paraguay's agropastoral development. Paraguay presently exports beef, forest products (logs, lumber, tannin, and palmito), corn, cotton, tobacco, fruit (grapefruit, pineapple, bananas), edible, industrial and essential oils (i.e., soybean, cotton seed, palm, tung, and petit grain oil), yerba mate and coffee. World market conditions and paraguay's small share of the world market would permit it to increase its exports of most of these products and to add to its list of export commodities citrus, vegetables, sorghum, onions and potatoes if production, quality, processing and marketing organization could be improved. Moreover, Paraguay consumes about 100,000 tons of wheat annually as compared to its present production capacity of approximately 30,000 tons so that there is room for substantial import substitution with respect to this commodity. 18. The Government, fixes minimum producers' prices only for wheat, sugarcane and soybean0J Wheat and soybean price fixing is an element of the "Entrepreneurial Agriculture Program" (also known as the ITheat Programi undertaken by the Government in 1967. This program aims to increase Paraguayan wheat production to the point of meeting internal demand, now at 100,000 tons annually. The program is designed to overcome the com- parative advantage of Argentina--Paraguay's principal supplier of wheat--Ir.- combining-winter wheat cropping with summer cropping of soybean, hybrid corn, etc., on large "entrepreneurial" farms utilizing intensively agri- cultural machinery and other non-labor inputs. The success of the progran depends--inter-alia--on the adequacy of local facilities for the processing and export marketing of respective summer crops as well as upon the overall efficiency of commercially scaled double crop production. As a result of the plan, wheat production increased from 7,200 tons in 1966 to an estimated 33,000 tons in 1970. 19. The wheat program is administered by the Agropastoral Department of the BNF; the BNF being the predominant internal source of investment credit in Paraguay, as well as the major supplier of working capital financing to the nation's productive sectors. The operation of the-Agro- pastoral Department reflects the structure of the sector. - Thus the Department also administers a program of investment and working capital financing for farmers and rarchers in the intermediate category; i.e., small operators participating in the money economy. This "Programa de Promocion Agropecuaria" is largely funded by DB credits, wJhile the wheat program has been funded largely by tied AID credits and PL 480 counterpart funds as well as by suppliers' credits-covering the importation of tractors and agricultural machinery. 1 There is no Government trading agency so that these prices are enforcec2 at the point of purchase of the primary material by the private process J`g plant. Moreover, while price minima are contingent upon fulfillment of prescribed product standards there is no Government apparatus for grading these products. - 13 - 20. Wihile loans made under the small farmers and ranchers program have-totalled $1,314.1 million (US$10.4 million) over the 1968-70 period (i.e. through August 1970), loans made to "entrepreneurial" sized farmers under the wheat program have amounted to 02,420.5 million (US$19.1 mill&on'i over the same period. Rates of recuperation under the two programs are stated to be 67 and 60 percent, respectively, although the refinancing of arrears in payments due from large farmers-probably masks a substantially lower recuperation rate in the latter case. The wheat price currently is fixed at 010.7 per kilo (US$85060 per ton), equal-to the-weighted average CIF import cost of Argentine and surplus U.S. wheat. The fixed soybean price is 085 per kilo (US$67046/ton). Cash flow projections made by the BNF using these producers' prices and assuming wheat and soybean yields of 1,200 kilos per hectare show commercially scaled double cropping operations to be profitable (see Table 7.7, Statistical Appendix). However, limitations on soybean processing facilities have tended to depress soybean prices while competition from smuggled Argentir(. flour 1a,s made it difficult for local millers to pay the minimum wheat price.: JiIoreover, wheat yields in particular have fallen short of pro- jected levels. Perhaps US$10 million in funds repassed to entrepreneurs under the wheat program will never be recuperated. The principal probler contributing to the inefficiency of the wheat program have been: (a) difficulties with the timing of external loan disbursements which have delayed planting and reduced yields; (b) poor project evaluation: 12,000 hectares of Chaco land planted in wheat were found to be unsuitable for such cultivation and subsequently entirely abandoned; very large credits were conceded to completely inexperienced farmers who proved incapable of managing enterprises of such proportions; (c) excessive use of tractors and rachinery and indiscriminate use of suppliers' credits to finance their importation: about US$9.5 million in tractors and machinery were importe(K from five countries and a far wider variety of manufacturer> lack of adequate maintenance--many of these machines lie neglected in the fields--exacerbated the problem; thus the wheat program is now confronted with the need to totally replace much of this agricultural machinery and solve an extremely complicated spare parts problem for the remainder, and 1 Argentine flour has been smuggled into Paraguay at a price equal to about 70 percent of the price which local mills have to charge if the- pay 010.70/kilo for wheat. The lower price of smuggled Argentine flour reflects--inter-alia--the lower CIF cost of Argentine than of surplus U.S. wheat imported into Paraguay and the fact that exported Argentine wheat bears a tax which was not applied to wheat sold to Argentine millers. - 14 - (d) lack of an adequate technical assistance, storage, pricing and marketing apparatus which has also obstructed the IBR colonization program. 21. Continuation of BNF support for entrepreneurial agriculture is probably warranted, especially since the BNF has developed a fund of experience both on its own part and on the part of certain farmers participating in the wheat program which should not be abandoned. ilore- over, the availability of untied external funding on suitable-term would, of itself, constitute an important improvement in the program. However, before attempting to secure financing for any expansion of the program the profitability of "entrepreneurial agriculture" should be demonstrated clearly and the losses suffered by the program to date recapitalized with appropriate Government support. Livestock 22. Beef constitutes some 20 percent of Paraguay's total primary production. Moreover, exports of corned and frozen beef and beef extract amount to some US$18 million annually or to 30 percent of Paraguay's current foreign exchange earnings. According-to official statistics, Paraguay's cattle herd presently amounts to 5.6 million head.!! Even under extensive herding methods it is thought that 1.75-times as many animals could be stocked on Paraguay's natural pastures. 23. - Beginning in 1964 the IBRD made a series of three loans totalling US$19.7 million-to finance investment in facilities for improved ranch management--i.e., fencing, water storage, ranch buildings, improved pastures and breeder stock--by large scale ranchers. The 700 ranchers receiving IBRD funded livestock development loans stock an estimated 30 percent of all Paraguayan cattle. Cattle development loans have also been made available to small and medium-scale ranches with IDB financing since 1968. Despite these development efforts herd increase has been estimated at an annual average of only 0.7 percent in recent years wqhile the take-off rate (animals slaughtered as a percentage of the total herd) is thought to have remained fairly constant at 11 to-12 percent (compared to a take-off rate of about 20 percent in Argentina). 1Moreover, the nunber - of cattle slaughtered for export has tended to decline since the mid-sixtie'. Despite the fact that projected financial rates of return on new investment in livestock development funded by the IBRD are very high, arrears in debt service payments by sub-borrowers rose dramatically in 1970 and the pace of loan applications has fallen off. U/ This is no more than a rough estimate. Non-official data produced by the National Aftosa Eradication Service, (SENALFA), which is about one-third of the way through its campaign to vaccinate the entire herd, indicate that the cattle population is much smaller than 5.6 million. - 15 - 24. These disappointing trends are difficult to evaluate because of two factors: (i) the prevalence of large scale smuggling of live cattle over the border with Brazil; and (ii) the drought which has afflicted the Chaco--which stocks 40 percent of the entire herd--since 1966, peaking in intensity in 1970. One clear success of the IERD-funded Livestock Development Program is the installation of water storage facilities in the Chaco without which--it is universally acknowledged--cattle would have died by the thousands in 1970. Also, data produced by the Fondo Ganadero--the agency presently administering the Livestock Development Program--show significant improvement in ranch management on the part of a small sample of 23 sub-borrowers who have received three successive livestock development credits. These data compare certain important characteristics-of the 23 operations at the time of application for each successive loan. They show improvement in the stock rate, the calving rate and in the composition (steers vs. cows) of cattle sold for slaughter.. First Second Third Loan Loan Loan Total cattle 75,562 86,233 111,249 Average hectares/ranch 15,230 15,271 14,249 Average cattle/ranch 3,285- 3,749- 4,839 Average pasture hectares/cattle 3;57 3.13 2.35 Brandings/cows (calving rate) 44.36 50.94 58;74 Heads slaughtered/total stock 12.81 13.28 12.50 Cows slaughtered/total stock 4.70 5.88 3.20 Steers slaughtered/total stock 8.11 7.40 9.30 Source: Livestock Fund 25. Although it appears that the majority of participants in the Livestock Development Program do not have access to adequate tecinical assistance, the above sample-indicates that at least the approach being followed by the Program--i.e., improved extensive exploitation of natura' pastures--is appropriate. The profitability of ranching is another matterJ Although low in comparison with neighboring countries, the producers, prices currently available to Paraguayan ranchers for cattle slaughtered for internal consumption appear to be high enough to induce new investment in ranching. This view is supported by the cash flow analysis of a mediun scale ranch worked out by the BNF (see Table 7.9, Statistical Appendix). Lower producers' prices in Paraguay than in neighboring countries are viable assuming clandestine exports can be controlled, because of the low cost of land and its capacity for supporting natural pastures. On the other hand, the concentration of Paraguay's principal export beef processor-'- on corned beef--a product which has tended to minimize the final product value/liveweight value relationship--has resulted in a large negative differential between producers' prices paid by these principal processors and those paid by butchers slaughtering for internal consumption. WIith the export market talcing about 25 percent of total Paraguayan slaughter, this differential substantially reduces the profitability of ranching. - 16 - AVWMIGE PRODUCERS PRICES (US/kilo livewreight) PARAGUAY _/ ARGENTINA Export Consumption Tinier's INarket 1961 11*4 loe6 16.6 1962 11.7 11;7 14;0 1963 10;8 12;8 16;9 1964 13;1 13;1 28;9 1965 17;8 13.5 30;0 1966 16;3 16.3 25*2 1967 16;3 16;3 19.2 1968 155 16;3 18.3 1969 1302 16-3 19e0 1970 17.6 24.9 27.0 2/ 400 kg. steer. Source: Central Bank of Paraguay 26. Paraguay's principal processors of export beef have a production capacity which is about three times as great as the current supply of beef for export, They operate only during four months of the year and produce canned beef and beef extract, the production processes for which require a proportionately higher processors margin than does the processing of frozen beef, despite the higher transport cost of embarking frozen as opposed to canned beef in Buenos Aires.1/ These companies serve traditional markets through long established marketin- mechanisms. They allege that the poorer quality of' Paraguayan export beef mal;es it suitable only for canning or for the manufacture of extract. However, with recent increases in world beef prices a number of small frigorificos have been established in Paraguay which are producing frozen beef for export and are paying approximately as much to producers as the latter are receiving from the slaughterhouses processing meat for internal consu,ption. The following table illustratos the distribution of the export dollar in the cases of principal Paraguayan processors, new Paraguayan processors of frozen beef and Argentine processors of frozen beef. 1J The need to transship Paraguayan beef in Buenos Aires imposes-an important differential freight cost on the Paraguayan product. For canned beef, fluvial freight to Buenos Aires and transshipment there costs-apDroximately US$20-25/ton. For frozen beef the cost is US$45-50/ton. - 17 - DISTRIBU2IO'2 OF Er'ORT BOLLAR PARAGUAY*g - G Frig. A2/ Frig.7 ARGBNTfl\A FOB Buenos Aires 1.000 1.000 1.000 Freight to Buenos Aires .027 .060 Taxes .o49 .o67 *059 Frigorifico Margin .527 .225 .245 Labor (.099) (;0o6) Interest (.020) (;011) Internal Transport (;012) (;o14) Other Costs (;296) (;095) Depreciation (.045) (.dll) ?rofit (.05:5:) (.038) Gross to Producer .397 e648 .696 lJ These data represent total earnings and total costs. Thus, earnings not only from principal output such as frozen and corned beef extract but also-from by-products such as tallow, offals and bone meal are included. j Frigorifico A produces primarily canned beef and beef etract and operates only approximately four months out of the year. S/ Frigorifico B produces primarily frozen beef and operates throughout the year. k/ The Argentine example is based on: (a) the price per ton of frozen beef exported by Argentine-frigorificos; and (b) the average Linier's market price for live beef. This underestimates the frigorifico margin since it excludes returns from the sale of by-products. Source: IBRD staff estimates. 27. Responding to the competition for live beef of new frozen beef processors, the principal processors have already begun to modify their processes in order to improve the unit -value of production and, hence their ability to pay higher live beef prices. Involved is a change from the production of corned to the production of cubed beef which has a higher value per unit of live beef input. About 20 percent of the total output by value of the principal processors during the 1971 season is expected to be in the form of cubed beef. Also it is expected that by-product utilization will improve; for example, one firm anticipates being able to export pituitary glands in 1971. IIoreover, world prices for canned beef products have recently begun to increase rapidly-as high prices for frozen beef have dimainished the supply of canned; U.S. CIF prices for Paraguayan corned beef increased by about 20 percent over the last few - 18 - months and are expected to go up another 15 percent by the outset of the 1971 canning season. Consequently, producers' prices paid by these processors are likely to increase by 15 to 20 percent--on average--during the 1971 season, vis-a-vis 1970. In sum, considering the world market situation and assuming that free competition among Paraguay's beef processors continues to prevail, producers' prices paid for export beef are likely to be compatible with an increase in the export surplus. 28. However, there are other problems limiting the profitability and obstructing the development of livestock production. The tax treatment of Paraguay's livestock industry is such as to discourage efficient division of labor on the part of the ranchers and to provide a disincentive to herd development. The transfer of cattle bears specific head taxes which vary depending upon whether the transfer takes place between ranches and slaughter- nouses processing for internal consumption, or between ranches and frigo- rificos processing for export, but have no regard for animal weight. These levies are a composit of a number of taxes and fees, including: sales type taxes, contribution to the aftosa program, and a substitute for the income tax. In the case of cattle sold to the traditional processors they amount to 15 to 20 percent of the producers, price. Since neither the processors nor the ranchers pay any other direct taxes (save for a property tax incident at 10 per 1,000 valuation in the case of the latter) these levies could be -eplaced as revenue earners by income taxation. SPECIFIC LEVIES ON CATTLE TRANSFERS (t per head) Slaughter for Internal Consumption Slaughter for Export Traditional Nei,T Between On To Slaughter- Frigori- Frigor- Ranches Ranches houses ficos ficos TOTAL 250 85 665 1,065 815 Of which: Transfer Tax 250 - 250 250 250 Complementary Tax g/ - - 515 250 Sub. Income Tax - - 300 200 200 Slaughter Tax - 20 35 35 35 Leather Tax - 15 15 - 15 Inspection Fee - - 15 15 15 Senalfa Fee - 50 50 50 50 1/ The complementary tax imposed on the frigorificos is a substitute for a number of other taxes, principally the income and export taxes. Its use reflects the difficulty of verifying the true income of the frigorificos in turn related to the system of aforo or fiscal valuation of exports. Source: Nlinistry of Finance - 19 - 29. The scarcity and high cost or working capital credit is another factor impeding livestock development. The :NF has made no line of wTorking capital credit available to the ranchers and for the very limited amount of credit available from the cammercial banks ranchers have been paying interest rates on the order of 20 percent. Especially In times of adverse climatic conditions this credit problem leads to herd depletion. Moreover, the disproportionate cost of credit unnecessarily reduces the profitability of ranching. One way to solve the problem would be to create a line of Central Bank rediscount credit0 applied either through the official intermediaries or through the commercial banks, which would be available at reasonable cost to the ranchers as working capital. Recently a line of working capital credit amounting to el00 million was made available by the Central Bank to the ranchers. This should be sufficient for the time being. However, a more permanent arrangement should be made in order to meet the short-term credit needs of the ranchers. 30. Appropriate policy recommendations to the Government with respect to livestock policy, therefore, would be to encourage the competitive situation being created by the entry of new frigorificos into the beef processing field and to replace existing taxes on cattle tra;nsfer by making appropriate modifications in the income tax so as to `,ring the frigorificos and the ranchers within its scope. In the eveo:t that the latter proves impractical for administrative reasons the Go-ernment at least should modify the cattle transfer tax so that it ta-es account of animal weight. Additianal measures which should be taken include: (a) the provision of adequate working capital at reasonable cost to finance the purchase of breeder and fattening stock and to permit the rancher to retain cows (particularly when pregnant) and light steers; and (b) additional (or some) technical assistance to ranchers particularly those participating in the livestock development program. At present the Forido Ganadero has only 15 technicians to serve its 700 borrowers and most of these borrowers have received no technical assistance at all. It should be stressed that this is not simply a question of increasing the efficiency of the 10 Fondo Ganadero technicians or increasing their number; rather, it may also involve better coordination with the technical assistance services of the Ministry of Agriculture as well as with the research facilities of the National University. Forestry 31. In addition to occupying about 60 percent of Paraguay 's land area, Paraguay's forests provide raw materials which, exported either as logs or in processed form, earn some US$11 million in foreign exchange annually. Although the fcrest inventory currently being conducted by the FAO/UNDP in Paraguay is far from complete, it is estimated that about 6 million hectares or 23 percent of Paraguay's 23 million hectares of forest land presently contains wood of commercially exploitable quality arnd that most of this pioductive forest is privately owned. While total - 20 - wood cutting, which is estimated at about 15J million m3 annually, may have been less than the yearly growth of commercially exploitable wood, cuttings have been very selective in nature so that the more accessible stands of higher quality woods such as lepacho and cedar as well as quebracho wood (used primarily for tanning-extract and secondary for railway ties) have been seriously depleted. UNDP forestry experts now estimiate that Paraguay's accessible first class hardwoods will be depleted beyond possibilities of regeneration within 20-years if present methods and rates of exploitation are continued. M4oreover, Paraguay is presently earning from export of her forestry resources onl'y a fraction of the returns which would be consistent with the efficient processing and utilization of forestry resources. The inefficiency talkes several forms: (a) sumptuary utilization of woods (such as the use of cedar to manufacture export containers for canned beef); (b) wastage of wood (resulting from long delays between cutt.rIn ard sawing, as well as from the mechanism inefficiencies of 2araguay's 120 saw mills); and (c) the lack of the plant, equipment and experience necessary to produce and market such-sewi-finished products as board, veneer, plywood, ties, etc., in adequate volume. 32. In 1967, Paraguay enacted legislation restricting log exports in order to induce the adding of value to this primary product; such exports are to-be reduced gradually until the point of complete elimi- nation in 1973. However, the lawi has not been effectively administererl the extent of coinpliance with it seems to be the making of one longi- tudinal cut in-each log which is then nailed back together and exported as sawn lumber. Paraguay has no legislation or forestry service for limiting the extraction of forestry resources or requiring replanting, fire and disease prevention, etc. A draft law creating a National Forestry Service and charging it wfith such responsibilities has been prepared by the ;linistry of Agriculture and Livestocl but has not yet been submitted to Congress. The problem of motivation for the private agents who own most of Paraguay's forest resources will be a most difficult one in viewf of the fact that the regeneration period for Paraguay's first class hard woods ranges from 50 to 100 years. To nake profitable private operations consistent with regeneration requirements, the integration of hard and soft wood production would probably be required. It appears that both pine (15 year production cycle) and palm heart (7-10 year production cycle)-production could be integrated with hard wood exploitation in Paraguay. Another possibility is the installation of a cellulose industry first utilizing the less valuable hard woods and gradually replacing these with pine. Since cellulose production requires large amounts of electric energy this latter option is supported by Paraguay's hydroelectric potential, particularly by the prospective international hydro-projects now being prom a ed by the Gov- ernments of Brazil and Argentina for the Guaira Falls and Apepe Rapids on the upper and lower Parana, res-pectively. - 21 - 33. To date the problems of forestry regulation and of fostering efficient conrnercial exploitation of forestry resources have not been attacked in coordinated fashion. The National Development Bank is interested in incorporating a program for financing wood products development in the activities of its Development Department. Specificaollj it is interested in financing the production of pine to be utilized in tihe manufacture of cellulose. However, the project neither makes any specific provision for the installation of a cellulose plant, nor does it talce into consideration provisions of the draft forestry law restricting the extraction of wood and requiring reforestation. 34. Only one logging and wood processing enterprise is presenti,l capable of reasonably complete Qransformation of felled timber into semi-finished products. Two others are seeking funds to equip themselve3 for such an integrated operation-and have made contact with both the IDB and the IFC for this purpose. The incapacity of Paraguay's wood processing sector has obstructed the access of Paraguay's forestry resources to external markets; the sector has not even been able to mobilize semi-finished products in sufficient quantity to provide adequate samples to foreign furniture manufacturers, etc. Forestry enterprise probably constitutes a prime potential opportunity for agencies interested in financing improvements in Paraguay's export capacity and institutional structure. For such assistance to be effective, the following steps would be necessary: (a) enactment of legislation designed to maximize benefits accruing from the exploitation of forestry resources by regulating their use in such a way as to offer ap-,propriate practical incentives to entrepreneurs; (b) creation--with appro-priate funding--of a forestry service capable of enforcing such legislation; (c) preparation of appropriate integrated projects for wood production processing and marketing; and (d) adoption of appropriate policy orientation on the part of the National Development Bank or any other intermedia_r channelling external resources to final borrowers in the forestry sector. 35. Assuming that these steps are taken, a possible program for channelling external financing to the forestry sector might include the following elements: (a) Direct financing (including possible equity participation'n of one or two integrated wood processing plants which would not only of themselves have an imoortant impact on the balance of payments, but would also serve as demonstration projects for the Idnds of technical improvements needed throughout the wood processing - 22 - industry; total investment required for each integrated plant would probably be on the order of US$6 million of which about half would constitute direct foreign exchange costs; as mentioned both the IFC and the IDB have already been contacted by enterprises desiring to make such an investment. (b) Creation of a Forestry Fund to finance sub-loans by the Development Department of the BNF to other operators in the forestry sector; an appropriate level for the externe'. resource component of the Fund might be on the order of US$6 million. B. IMUANUFACTUREIG IIDUSTRY 36. Vor 1962-69, official statistics show an overall annual growth rate of 4.7 percent for industry (including value-added in meat, other food and wood processing, but excluding construction and mining). With overall economic grow^th during this reriod at 4.4 percent annually, industry's share in GDP increased from 16.1 percent in 1962 to 16.5 percent in 1969. 37. For analytical purposes the industrial sector is subdivided into three categories: animal slaughter (as oDposed to animal processing in the form of chilling, freezing, boning, canning; extract production, etc.), handcraft establishments, and manufacturing. Handcraft estab- lishments are all those employing less than five persons. Even for the manufacturing category, however, only 5 percent of all enterprises included employ more than 100 persons. The composition on the manu- facturing subsector is given by the following table. The bulk of the sector is engaged in processing domestic raw materials; the major exceptions to this general characteristic being the petroleum refinery and a very small vehicle and consumer durable assembly industry. - 23 - VALUE ADDED IN I4AiTUFACTUPTTG (IO1UIJSTRIA FABRIL) (1962 and 1967 1962 1969 Average Annual Product Group (liilions of 1977 (<) Growth 1962-69 Food Froducts 1,55 1,588 (23;1) 0.3 Beverages 341 760 (11;l) 12.2 Tobacco 418 400 (5;8) -0.6 Textiles 584 676 (9.8) 2;1 Wood Products 175 306 (4.5) 8;3 Chemicals 7).3 884 (12.9) 2.5 Petrol Products -1/ 568 (803) Non-lietallic ilinerals 178 400 (5;8) 12.2 Transport Equipment 178 372 (5;4) 11.1 Others 635 920 (13.3) 5.7 TOTAL 4,798 6,875 (100.0) 5.3 1/ Paraguay's only refinery started production in 1966. Source: Secretaria Tecnica de :7lanificaci6n. 38. IIanufacturing is higlhly concentrated in Asuncion and the adjacent "Departamento Central" which together account for some 70 per- cent of total manufacturing output. A few minor centers of specialized production based on specific raw materials are located in other parts of the country: cement production and production of quebracho extract (tannin) in the northeast; wood processing and palm heart canning in the east; sugar, alcohol and wine production southeast of Asuncion around Villarica, and textile industry in the south near Yilar. 39. N\o detailed statistics are available for emplomient by individual branches of industryr. Total er.ployment in industry increased at an average annual rate of 3.6 percent fromnl962 to-1969, raising the share of industry in total employment from 14.1 to 14.7 percent. Since industrial value-added grew by about 4.7 percent, labor productivity - has increased at about one percent annuallly during the 1962-69 period. 40. Investment in manufacturing between 1962 and 1969 has been estimated at about 013 billion (in constant 1969 prices) representing 17 percent of total gross fixed investment during that period. Com- paring investment with the increase in value-added it appears that the incremental capital output ratio averaged about 3.2 during this period. Very rough estimates indicate that investments have been financed as follows: - 24 - Source Mlillions of 1969 $ Percent Internal Financing 8,930 68 Industry's self-financing o,720 7 National Development Bank (B\F) 210 2 (Own Funds) External Financin 4,270 32 Foreign Loans through BNF) 1,420 11 Direct Credits 1,775 13 Direct Investment 1,075 8 TOTAL 13,200 100 Source: National Development Bank 41. Whqile investment and workcing capital credit has been avail- able to the manufacturing sector from the Development and Commercial Department of the BN\ at interest rates of about 12 percent, commercial banlc financing has been very scarce and very expensive. Paraguay's commlercial banks concentrate on the trade related transactions of the commercial sector and of certain large export processors and the total cost of their credit ranges between 13 and 22 percent in real terms.- Small enterprises have almost no access to bank credit; their invest- ment requirements are too small to merit BlF attention and they are not in a position to meet creditworthiness requirements for working capital financing from the BNFa's Commercial Department. 42. There is very little state ownership in Paraguay's manufacturirg sectcr. IIajor exceptions include the nation's only cement plant, one meat processing plant and the state alcohol enterprise. No new direct investment in manufacturing is included in the public sector investmnent program. 43. Costs of production and prices of products manufactures for the domestic market have remained remarlcably stable since the last minimum wage adjustment in 1964. Labor and local raw materials prices are relatively lowi while energy and working capital are very expensive by international standards. At about US$o.o0 per kw¢h the cost of energy supplied by the State Electricity Administration (ANDE) to industrial establishments is several times as high as in neighboring countries. Ilany enterprises within the radios of ANDE's distribution network maintain their own thermal generating facilities, despite the high price of diesel fuel. Economic and perhaps even financial rates of return on ANDE operations may not be maximized under the exdsting electricity rate structure. At about US$'O.18 per gallon, the cost of diesel oil supplied by Paragua-y's privately owned refining monopoly-- at special rates--to the cement plant is 2.5 times as great as the cost of diesel fuel refined in Argentina. The relatively high petroleum - 25 - products prices prevailing in Paraguay are a function of high crude oil transport costs and large refinery profit margins rather than of any unusual tax burden. However, unless the lyear concession granted the refinery operator in 1966 is modified, ex refinery prices cannot be reduced until 1981. 440 Paraguay has done relatively little to exploit its potential as an exporter of processed agropastoral products and wood. The situation of the wood processing industry has already been discussed as has that of the meat processing industry. Unlike almost every other manufacturing subsector the 12 plants making up the meat processing in- dustr-y have substantial excess capacity and are well equipped to process foreseeable increases in Paraguay's exportable meat surplus over the next several years. Some additional investment in sanitary facilities may be required by this subsector as it increases its penetration of world marlkets for frozen beef but the relatively ninor costs involved would be-well within the financial capacity of most of the enterprises involved. Mlore serious is the need to strengthen the Animal Disease Control Program and .`Teat Inspection Service of the iinistry of Agri- culture and Livestock which have been adequate to date but would have to be strengthened to meet the stricter hygiene requirements of various important external markets for f zen beef--such as the U.S.--which Paraguay has not yet penetrated.J In sharp contrast to the meat processing industry, however, only one modern large scale enterprise currently processes edible oils for export, and the monopsony position enjoyed by this firm vis-a-vis-primary producers is presently depressing producers' prices for soybeans. Other enterprises process a variety - of crops--fruit and juices, palm kernel, tung and petit grain oil, etc.-- but their operations are on a small scale. By and large the paucity of processing facilities has tended to serve as a bottleneck, blocking the expansion of primary production in many lines. Production of the principal edible oils exported by Paraguay appears to be profitable at existing FOB export prices, so that price incentives for investment in the expansion of this manufactur-ing subsector are not lacking (see Table 8.-5, Statistical Appendix). Rather, the principal inqpediments appear to have been: (i) unnecessa-ry bureaucratic obstacles to export; (ii) lack of investment financing; and, perhaps most importantly, (iii) a shortage of entrepreneurial talent. J W,hile the plant staff of the meat inspection service is prepared to perform inspection in accordance witha international standards, the central headquarters staff does not appear to have sufficient personnel, logistical facilities or hierarchical status to provide adequate overall supervision for this service. MAJOR INDUSTRIAL EXPORTS, 1962 AND 1969 (Volume in 1,000 metric tons; VTalue in millions of LS$ - FOB)!/ Average Annual Rate PRODUCTION 1962 1969 of Change 1962-69 Voline Value Volume Value Volume Value Sawm Timber 29.7 1.8 60.1 5.4 10.6 16.8 Processed Meat 17.0 7.5 17.2 11.3 0.3 6.1 Coconut Oil 2.9 0.7 8.8 2.1 17.1 16.3 Tung Oil 5.2 1.6 11.0 2.4! 9.8 6. Essential Oils 0.3 1.1 0.5 1.8 6.8 7.2 Oilcales and Meals 18.5 0.Lt 32.-) 1.3 7.2 20.0 Quebracho Extract 30.6 2.5 16.1 1.9 -8.8 -3.9 Palm Hearts, Canned 0.1 0.0 5.7 2.6 2/ 2/ U Portland Cement 0.5 0.0 4.6 0.1 36.0 29.5 Other Industrial Exports - 1.2 - 2.3 - 9.7 Total Industrial Exports - 16.8 - 31.2 - 9.3 Total Exports of Goods - 33.5 - 51.0 - 6.2 Industrial Exports as a Percentage of Total Goods Exports - 50.1 - 61.2 - - 1/ These are aforo cr fiscal values which understate actual FOB values by as much as 30 percent. 2/ Exports of palm hearts started from zero in 1961; annual increase in 1968 and 1969 were as follows: 1968 19969 Volume 16.1 23.0 ,alLf 3.. L 02O se1, ) R.Penco Gentre ,i7 f1l ' -'.';.::!' - 27 - 45. However, the Government is now ta'dng several measures to attract entrepreneurail attention to enterprise which will utilize Pa- raguay's primary mater als and increase export earnings and employment. A new investment law i provides important incentives for investment in industry. The law classifies investments as "necessary" or "converient" and allocates incentives accordingly. "Necessar-y" invest-ments-are those which utilize local primary materials in production for export. Invest- ments in labor intensive processes transforming local primary materials into products substituting imported merchandise in the domestic market are classified as "convenient". Investment both in new enteriprises and in the expansion of existing enterprises is elegible for benefits. For foreign investors the new lawi, in effect, guarantees exchange cover for remittances of profits, dividends, royalties, interest, etca-, free of any limitations on the amounts thereof. For all investors--local or foreign--the law concedes the following major benefits: 1J Ley Ao. 216 of November 9, 1970; this law replaces Ley No. 202 of September 7, 1953, and Ley No. 264 of February 25, 1958, under which foreign and domestic investments were treated differently. Degree ZfExempt on or Reduction Exemption from or Reduction of: Regular Amount Necessary inv. Convenient Inv0 1/ a. Taxes on exchange cover for capital imports 3%.. LI 100% b. Import duties, additional import duties and 2/ complementary customs duties - 100% c. Exchange surcharge on capital goods imports 2/ 100% 70% d. Prior deposits 100% FOB value3/ 100% e. Income tax 25% 50% 30% (for 5 years) f. (i) import duties3 additional import duties; complementary custonm duties; and 100% 75% (ii) exchange surcharge on imported raw materials, packing materials and c other imported inputs which are not available from domestic production 2/ 100% 70% - (for 5 years) (for 4 years) g. Prior deposits on imports mentioned under (f) 100% FOB value3/ 100% h. Export duties, additional export duties and other levies on exports 4/ 100% 1/ One percent tax on purchase and sales of foreign exchange plus 2 percent comnission fee on sales of foreign exchange. 2/ On average total levies under (b) and (c) amount to about 70 and 90 percent on imports from neighboring and other countries, respectively. 3/ With a normal retention period of 120 days and annual interest at 24 percent the prior deposit require- ment increases costs of imports by about 8 percent. 4/ Total levies on exports are about 9.5 percent for meat products; betwieen 6 and 8 percent for w^Sood produLcts; and about 10 percent for processed agricultural products. - 29 - 46. Moreover, the newly established Export Promotion Center (CEPEX), an adjunct to the 1linistry of Commerce and Industry, is presently drafting legislation which will simplify export procedures and set up a system of drawback and temporary admission which will either reduce by 95 percent (drawback) the import charges incident on imported inputs used in pro- ductiorn for export or entirely exempt (temporary admission) such inputs from import charges. Simplification of export procedures is badly needed; some 52 signatures are required on respective documentation before each individual shipment can be legally exported. This contrast with the fact that only 12 signatures are required by import documentation. 47. Certain import substitution industries--primarily the cement and petroleum monopolies--enjoy fairly effective absolute protection in Para- guay. Although high levels of protection for other industries--such as flour milling, textiles and cigarrete manufacture--theoretically exist, smuggling makes these barriers ineffective and, in fact, may have transformed Paraguay into an excessively open economy. 48. The industrial investment credits administered by the Devel- opment Department of the BNF have been funded largely by IDB and Kreditanstalt loans. In addition to the forestry products development program mentioned above, however, one other opportunity for channelling additional external resources thlrough this Department may exist, namely, financing for the installation of additional oil and/or food processing industry. Neither the IDB or Kreditanstalt presently contemplate pro- viding financing for this particular type of investment. On a much smaller scale, the Development Department is seeking financing for the following list of small investment projects: - 30 - POSSIBLE SLMAL INVESTIENT PROJECTS Rate of Return Total Investment on Total Product or Industry (million US$) Investment (X)i/ 1. M4ilk Powder 0.3 28 2. Construction Mlaterials (a) Bricks, Tiles 0.4 32 (b) Concrete Blocks 0.1 24 3. Ice Bars 0.03 31 4. Packing Material (Cartons) 0.7 30 5. Soybean Oil and Meals 0.7 18 6. Wood Products (a) Parquet O.1 19 (b) Furniture 0.3 33 7. Leather Tannery -.4 22 8. Small Slaughterhouses 0o4 38 9. Fruit and Vegetable Processing (a) Tomato Juice and Canned Tomatoes 0.3 24 (b) Canned Corn 0.1 32 (c) Canned Pineapple 0.2 21 10. Kenaf Products (sackcloth) o.6 25 11. Fertilizer 0.5 25 12. Glass Containers (Bottles) 1.4 17 130 Agricultural Equipment (tools, plows, etc.) o.4 30 TOTAL 6.9 1] Defined as annual sales value net of production costs (including depreciation, interest and taxes) over the total of fixed and working capital. Source: Secretaria Tecnica de Planificacion. - 31 - 49. The effectiveness of external financing for the industrial sector would be increased greatly by the implementation of the following policies by the Government: (a) simplification of export procedures; (b) establishment of more economic electricity and diesel oil prices; and (c) establishment of some sort of directed credit mechanism wshich would make commercial bank credit generally available to the industrial sector at reasonable cost (see para. 87). C. TOURISM 5o. Tourism has been the only dynamic element in Paraguay's export performance in recent years and promises to be of rapidly increasing importance to the economy in the future. Attracted by improved road links and by the availability of luxury _goods at relatively 1ow prices, middle class tourists from Brazil ahd ArZontina have been the most important source of the 32 percent average annual increase in tourism earnings registered since 1964. An additional important attraction for Argentine tourists is the mild Paraguayan climate during the Argentine winter, particularly during the July national and school holiday period. For 1970, Paraguay's tourism earnings are estimated at about US$16 mil- lion or 18 percent of total goods and non-factor services export earnings. The number of tourists visiting Paraguay during the year was approximately 120,000 of which about 50 percent were from Argentina, 25 percent from Brazil and 10 percent from the U.S., the latter stopping in Paraguay on inclusive South American tours featuring the Parana River's Iguaz'u Falls to which the easiest access for tourists from outside the region is from Asuncion. 51. IBRD staff have made an intensive survey of Paraguay's tourism potential concluding that tourism earnings should grow at average annual rates of 17 to 26 percent over the next several years if certain bottle- necks presently impeding the development of this sector are removed. One bottleneck is the shortage of medium price hotel and motel accommodations in Asuncion and Puerto Presidente Stroessner (entreport for Brazilian tourists). An IDB-funded BNF industrial credit program has provided US$800,000 for the installations of several small hotels outside Asuncion but the larger scale superstructure required to facilitate tourism growth have as yet no source of financing. The second major tourism bottleneck is the inadequacy of the ferry services linking Asuncion and Encarnacion (Paraguay's southeastern extremity) with the excellent Argentine road net- work. Improved ferries can provide a short-term solution for this problem. - 32 - D. THE T7-L.ISPORT SECTOR 52. Paraguay is an inland country divided from north to south by the unbridged Paraguay River, which joins the Parana River at the Argentine border (Corrientes). The two rivers constitute Paraguay's most important transport links with the outside world. West °f the Paraguay River is the Chaco, a sparsely populated region (245,000 km ) which serves mostly as a cattle raising and agricultural area. East of the river (160,000 km2) are the major population centers. About 80 percent of the country's population of 2.2 million, and 80 percent of production are located in the triangle roughly defined by Asuncion, the country's capital, Ehcarnacion and Puerto Presidente Stroessner. The so-called "Triangulo"l area generates by far the most important demands for transport services. 53. Until the 1950's the country depended mainly on river and rail transport for both internal and intermational communications; the rudimen- tary condition of road and air transport services were important factors retarding economic growth. Both internal and external developments have changed this situation. On the internal side, considerable attention has been given to improvement and expansion of Paraguay's road network, and a new runway has been completed as the first phase of the construction of a new international airport at Asuncion. Shifts in patterns of domestic traffic have then occurred--rail and river traffic has been increasingly moving over to the other transport modes partly induced by rapid deteriora- tion of railroad infrastructure and by increasing congestion and delays at the Port of Asuncion. On the external side, improvement of highways in Brazil and krgentina and the construction of a bridge over the Parana River at Puerto Presidente Stroessner have opened new alternative communication routes with the outside world. 1With completion of some ongoing projects (noticeably the Port of Asuncion's expansion and the highway maintenance program, see paras. 59 and 60), the national transport system will be fairly adequate to meet domestic and foreign transport demands. 54. The internal trade is carried mainly by (a) truck over a road network which radiates out of Asuncion and is extended by secondary and feeder roads reaching most of the productive areas; (b) river craft moving between Asuncion and various small ports along the Paraguay River; and (c) the Presidente Carlos Antonio Lopez (PCAL) railway which crosses diagonally the "Triangulo"l area connecting Asuncion with Encarnacion, but which has been carrying decreasing volumes of traffic. 55. A sizeable number of Government agencies participate in transport organization and planning and in the operation of transport services. The Highway Department (Direcci6n General de Vialidad) of the Ministry of Public Works and Communications (MCPC) builds, maintains and controls operations of the national and departmental road network. Feeder roads are the res- ponsibility of Local Councils (Juntas Viales). The MCPC also supervises the national PCAL railroad and builds and maintains the Asuncion Inter- national Airport. The National Administration of Navigation and Ports (ANNP), - 33 - an autonomous self-supporting public enterprise, is responsible for administering and operating all the ports in Paraguay and for river navigation. ALIITP also handles air cargo revenues and services at Asun- cionts airport. Eight public agencies or directing bodies and one private organization participate in civil aviation. In addition to those already mentioned (11CPC in infrastructure and AT1g]P in air cargo handling), there are (a) the General Direction of Civil Aviation, under the jurisdiction of the 1Eiinistry of Defense; (b) the National Administration of Civil Airports (ANAC), also under the Iministry of Defense; (c) the National Council of Civil Aviation charged with coordination and general policy; (d) the National Direction of 14eteorology, under the Ministry of Defense, (e) Radio Aeronautica de Paraguay, S.A. (RAPSA), private organization which provides radio-communication services; and (f) Linea Aerea Paraguaya (IAP) and Transporte Ahreo Militar (TA1),two closely related Government- aoned airlines which provide international and domestic transportation services, respectively. Investment planning in most of the transport sector is carried out by the MOPC and supervised by the Technical Secretariat of Planning. 56. In general, there is poor coordination among the numerous agencies and overall sector policy and planning is practically non-existent. To cope with these problems, the U1DP has approved in January 1971, financing of an integrated transport survey for which the 'World Bank will act as Executing Agency. Under Phase I of the study (eight months, starting in the second half of 1971), consulting services will be provided to: (a) review all available transport studies; (b) prepare recommendations for developing an integrated transport system; (c) prepare a list of priorities for investment in all sub-sectors; and (d) present recommendations for establishing a Transport Planning and Coordinating Agency. The second phase would consist of providing the Government assistance in the initial operations of the Planning Agency. The UNIP-financed program also includes an important element of training of local personnel. 57. River transport operates principally on the Paraguay-Parana-River Plata system. The Paraguay River allows small vessels to travel over 1,100 kms. from Corumba (Brazil) to Asuncion. From Asuncion to Confluenciaq where the Paraguay meets the Parana (390 kms.), navigation of river craft and small ocean freighters (1,000 to 2,000 tons) takes place about two- thirds of the time--a series of shoals hamper navigation, particularly during Septeiber-December. Although obstructed by rapids, the Parana River, which separates Paraguay from Brazil and Argentina, is navigable by small vessels for some 800 kms. between the Guaira Falls and Confluencia. Above the falls the river extends northwards through Brazil and is navigable, but cargo must be transferred around the falls by truck. Between Confluencia and the Atlantic Ocean (1,240 kms.) the Argentinian Government has agreed to maintain a 10 ft. deep channel in the shallowest section of the Parana- La Plata River. The agreement also includes maintaining a 6 ft. deep channel in the shallowest sections of the Paraguay River between Asuncion and Con- fluencia, where the river constitutes the border between the two countries. These depths were agreed upon based on existing river fleet and conveniences - 3h - for both Governments, but no economic study of the optimum draft and depth of navigable channel preceded the agreement. The 6 ft. depth is inadequate for vessels using the river, however, and the IJIMP has financed a study to determine the technical feasibility of deepening and improving the river channel between Asuncion and Confluencia. The consultants will also study the economic justification of recommended improvement works. 58. Until 1965 river transport accounted for 96 to 98 percent of international freight haulage, but traffic through all other export routes (see para. 53) has grown since at the expense of river transport. However, water transport still hauls practically all of Paraguay's foreign trade-- 645,0o0 tons or 92 percent of total import and export volumes in 1969. 59. The port of Asuncion, the most important of the country, handled 44 percent of the country's exports, 64 percent of imports and 60 percent of domestic river traffic during 1969. The IBRD helped finance a 320-meter extension of the quay together with ancillary installations. Work has been substantially completed. During the 19601s Paraguayts State Merchant Fleet added 27 vessels to the national fleet for a total of 31 ships, with a total carrying capacity of 20,000 tons (440 to 1,200 tons per vessel). The State Mlerchant Fleet handles about 30 percent of all international cargo; several foreign companies, mainly Argentinian, Dutch, Uruguayan and Danish, handle the rest. 60. The countryts road network totals 6,300 kms. of which 800 kms. are paved, 600 kns. gravel and 4,900 Ims. earth. About two-thirds of all roads were built in the period 1960-69. Although some paved and gravel roads need to be rehabilitated, the network provides adequate road transport service in most areas of the country. The Highway Department of the ILnistry of Public Works and Communications is charged w1ith improvement and mainte- nance of 5,300 kms. of national and departmental roads. Earth roads are not permanently passable; during rainy periods they are closed to protect them from deterioration and to prevent major maintenance expenditures. This problem is expected to be alleviated after execution of the ongoing IBRD- financed road maintenance project which is expected to improve the upkeep of road infrastructure. Still, shortage of skilled staff, insufficient road transport analysis and research, and inadequate organization, coordination and programming jeopardize the efficiency of present admin- istration. 61. The last census of vehicles was prepared in 1965. Adjusted only by the addition of imported vehicles, the Government estimated that there were around 23,700 vehicles in 1969, of which 42 percent were passenger cars, 27 percent piok-up6, 17 perxoent- trucks and 14 percent buses and micro- buses. Nation-wide traffic counts have not been made since 1966, but some data is collected sporadically on some of the most-travelled routes. Apparently, traffic varies from 2,500-4,500 vehicles per day in the access roads to Asuncion, to 150-600 on the main intercity paved highways, to 20-100 vehicles per day in rural feeder roads. Based on available informa- tion, traffic grew at a rate of 9.7 percent between 1966 and 1970 on main paved roads. This rate is consistent with the annual rate of growth of fuel consumption (9. 7 percent) and somewhat smaller than the rate of growth of the vehicle fleet (13 percent, the last two for the period 1965-69. - 35 - 62. Reliable figures on revenues from road user charges are not available, but Government revenues from such sources have clearly surpassed expenditures on hightvays in the period 1964-70 (see Table 5.7). MOPCts expenditures on highwzays have, nonetheless, more than tripled from 0257 million (US$2.0 million) to %861 million (Us$6.8 million) between 1964 and 1970. 63. The Presidente Carlos Antonio Lopez railway, the oldest of South America, traverses the country's southeast, between Asuncion and Encarnacion (380 kms.); a branch line (60 kms.) gives access to forest production areas east of the main line. The railwayts infrastructure and rolling stock is basically the same as in 1913, the year of the system's completion. Service is slow (condition of tracks makes speeds over 15 kms. per hour unsafe) and unreliable, and costs increase while revenues decrease partly due to rising competition from road transport. Freight traffic on the railroad decreased from 34,500 ton-km. in 1951 to 16,800 in 1961 and to 16,000 in 1966; in the last twxo years it has recovered to 26,600 in 1969. Passenger traffic has changed from 66,800 pass.-kms. in 1951 to 36,700 in 1961 to 14,100 in 1967 and up to 28,300 in 1969. The recovery during 1968/69 has been attributed to a decrease in railroad rates, diversion of traffic from the rivers (1968 wfas an exceptionally dry year), and a general rise in the nation's economy. However, the railroad is carrying most of the traffic that it could conceivably attract and the majority of what it can handle with present capacity. 64. Following the purchasing of the PCAL railway by the Government between 1959-61, considerable efforts were made to increase revenues and reduce costs; as a result of this measures, personnel was substantially reduced and average distance travelled increased from 195 to 324 kms. for freight and from 70 to 124 kms. for passengers during the 1960 s. However, financially the railway has faced growing deficits since 1958; in 1969 its deficit amounted to 081 million (Us$o.64 million). A recent stud514 proved that to maintain present capacity about US$9 million investment would be required. Moreover, a marginal cost comparison showed that fivefold increase in present traffic volumes would be necessaiy/ for the railway to become more economical than a parallel road network.-1 It is highly improbable that this will happen. Practically all Asuncion-Ehcarnacion through traffic has already been diverted to the highway linking these cities and most of the towns served by the railway are, or shortly will be, connected to some sort of road transport. General merchandise, lumber, salt 1/ The "Plan Triangulo"l Area Road Project, by Louis Berger, 1969. 2/ Route 1 (a two-lane paved road) parallels the PCAL railroad for 115 kms. and connects the two main railroad termini (Asuncion and Encarnacion). Gravel and earth roads of variable standards (passable in dry weather but generally in poor conditions) parallel most of the remaining rail line. The consultants made a marginal economic comparison of improving the PCAL railway vis-a-vis completing and improving the parallel road system to an all-weather earth road. - 36 - and tung make 70 percent of all freight cargo now hauled by the PCAL railway, but tonnage of practically all products has decreased considerably since 1950, especially cotton (90 percent), lumber (70 percent), and sugar (50 per- cent). WVe, therefore, believe that the PCAL railway should be replaced by road transport. The Government, however, has adopted the decision to maintain the PCAL railway and to incur the financial expenses necessary to support such decision, although specific plans for investment in the railroad are not yet known. 65. Paraguayls only international airport near Asuncion has a 3,400 v paved runway which was recently completed with USAID assistance. The old terminal is inadequate for present and expected traffic and its improvement should be studied. There are some 1,800 small airstrips, mostly private, spread over the entire country. These are grass airstrips except for a few which have earth or gravel surfaces. The Government-owned airlines, Lfreas Aereas Paraguayas (LAP) and Transporte A6reo Militar (TAM) provide interna- tional and local civil aviation services, respectively. In addition to pOOl' organization, the system also suffers from considerable excess of carrying capacity, particularly on the part of LAP, which bought recently three Electras to operate their international services. Up to now, however, their services are limited to the line Asuncion-Buenos Aires-Montevideo, competing with several other air carriers. In 1969 LAP's operating ratio was 1.6 percent. TAM provides domestic services to the majority of Paraguayls important towns with 1I DC-3's of their own. Besides, there are five smaller private companies operating local air-taxi services, mostly with CESSNAS. 66. The Government of Paraguay has recently undertaken major new investment starts in the transport field, most notably the paving of 425 krn. of the trans-Chaco road linking Villa Hayes (20 kms. north of Asuncion on the Paraguay River) with the Mennonite colony at Filadelfia, the reha- bilitation of the already paved Asuncion-Puerto Presidente Stroessner highway, and the above-mentioned highway maintenance program. The Trans- Chaco highway is the largest road project the country has undertaken at a total cost of some US$33 million. 67. Certain additional new investments in transport could be justified in the light of existing traffic statistics, over the next five years. Besides the above-mentioned improvement of the Asuncion airport terminal, the main sections of the roads Coronel Oviedo-Ruta 5 and Concepci6n- Pedro J. Caballero, which link newly exploited lands in Paraguayts northeastern quadrant with the Asuncion-Puerto Presidente Stroessner axis, and some access routes to Asuncion, could be considered for improvement. Also, the paving and/or improvement of various secondary and feeder roads in the "Triangulol? region appear to be feasible and desirable projects. In fact, - 37 - an IBRD-funded feasibility study of the "Triangulol" road paving project showed economic rates of return ranging from 9.0 to 15.8 percentJ on its various segments. The UTTDP-financed studies on river navigability (now under way) and on the integrated transport survey (see paras. 56 and 57), should provide the basis for a more systematic approach to analyzing Paraguay's transport investment requirements. E. ELECTRIC POINER 68. Public sector generation and distribution in Paraguay is handled by the National Electricity Administration (iNiME). Over the 1960-70 period ANDE increased its generating capacity from 22 to 126 NT and, in 1970, generated about 160 million KV1h. LTn 1969 ANDE completed installation of the second 45 InrT generator at its IDB-financed Acaray hydroelectric plant. ATDETs US$60 million ongoing invest;ment program--of which the foreign exchange component is to be almost entirely financed by the IDB--calls for the installation of the third and fourth 45 NIT: turbines at the Icaray plant) for transmission and distribution facilities, for small thermal plants in Asuncion and Encarnacion and for interconnection with Argentina (ENASA, Misiones Province) and Brazil (COPEL, Parana State). ANDE expects that domestic demand wTill increase some 7-10 percent over the next several yearsw Its investment program is, however, also predicated on the exploitation of markets for energy in Brazil and Argentina. Ongoing work on the trans- mission and interconnection lines to both countries are expected to be compl'eted by early 1973 and sales of energy to neighboring countries are expected to yield about UTS$2 million in that year. 69. In 1969 ANDE achieved an 8.4 percent financial return on its rate base including the second Acaray generating unit. Its rates are relatively high. Industrial users paid rates ranging from US/6.4 to US/4.7 per KLRh. New tariff schedule, approved on August 1, 1969, reduced this range from US/5.7 to US¢3.1 per KMh. The average price paid by industrial users in 1969 was US/5.1 per 10Th. For very large scale energy users such as a cellulose manufacturer--larger users than any yet installed in Paraguay--the new schedule offers rates as low as US¢o.5 per -%Wh. 70. NTevertheless, the high electricity rate has caused most of the existing enterprises to maintain their own thermal generating facilities despite the fact that the price of diesel fuel is high. Thus, modification of the present A1DE rate structure appears necessary. 1/ Discount rates needed to equalize the present value of costs and benefits over the 20-year life of the project. - 38 - 71. The Governments of Argentina and Brazil have been promoting the undertaking of massive bilateral hydro projects at the Apipe Rapids and Guaira Falls (Sete Quedas) on the lower and upper Parana Rivers, respec- tively. The interest displayed by the Governments of Argentina and Brazil reflect their own rapidly growing energy needs to which both projects would be directed. These are projects in 1,000 IiwM category each -with dollar cost-; of the order of several hundred millions of U.S. dollars. Preliminary discussions between the Government of Paraguay and the Governments of Brazi and Argentina indicate that the latter two would arrange financing, leaving Paraguay to pay for its participation in the equity of these enterprises from its share in generation sales. These projects would permit Paraguay to exploit the export potential of one of its most important natural resources. Since respective consultant services for feasibility studies are only now being contracted, these projects are only likely to get under- way during the second half of the 1970's. - 39 - III. PUBLIC INVESTIENT AND ITS FhIAICING 72. In the mid 1960's Paraguay's public sector sharply increased its investment in economic and to a lesser extent--social infrastructure. The principal areas of investment were road construction, hydro pow-er devel- opment, expansion of port facilities, construction of a cement plant, improvement of water and sewage facilities in Asuncion, reequipment and expansion of public health services and the implementation of a housing program. Public sector direct investments averaged 5.3 percent of GDP - over the 1966-70 period as compared to about 2.5 percent during 1962-65. External lenders financed a large portion of this investment effort; gross disbursements of external credits to the Government funded about 62 percent of direct public sector investments during 1966-70.1/ Along with this external support, however, the public sector increased its revenues from 14.4 percent of GDP in 1964 to 19e8 percent in 1970. To a certain extent this revenue performance was offset by real increases in current outlays. Nevertheless, about half of the revenue increase was saved; the sector's current-account surplus rose from 1.4 percent of GDP in 1964 to 3.9 percent in 1970. However, while the Goverment's savings effort and external support, prevented the upsurge in public investment from having an inflationary impact, the demand for public funds repassed by official intermediaries such as the BIF to the commodity producing sectors apparently far exceeded the supply; although the 'Tfinancial investment"' of the public sector during the period was substantial, most of it was directed to the acquisition of real property and other earning assets by the Social Security Institute. / hIncluding Guarani disbursements by the IDB and AID. - 4o - PUBLIC SECTOR FMIANCES, 1964-70 (values expressed as percentages of GDP) 1964 1965 1966 1967 1968 1969 1970 Current Su 1;4 2.1 2;3 2.9 3.2 2.9 3X9 Revenue F (lhh) (14)4 (17 T) (17;5) (187) (19;5) (19;-7 Expenditure (13.0) (144) (15el) (14.6) (15]4) (16.6) (1501i Capital Income 0.1 0.1 0.2 0.2 0.2 Ool 0 7 Fixed Investment 2.5 2.7 4_5 7.0 6.6 4.7 3-7 Financial Investment o.6 o.6 o.6 0.9 1.8 o.6 0.5 Financing (net) 1.6 1.1 2.6 4.8 e.0 2.3 0.2 Externalb, (U) (77) (2.0) (07) (7) (179) (0.2) Internally (1.2) (0.8) (0.6) (1.1) (1.0) (0.4) (-) Source: Vdnistry of Finance gl Includes proceeds from sales of services and goods by the Public Enter- prises and Decentralized Agencies as well as the tax revenues of the Central Government and Iiinicipalities. # The monetary accounts show bank credit to the public sector expanding much less rapidly than the residual estimate of net internal borrowing emerging from the consolidated public accoLuts would indicate. In fact; the monetary accounts show net credit to the-public sector equal to 5;7 percent of GDP as of end-1970 compared to 5.4 percent as of end 1964. This could be explained by the utilization of internal suppliers' credits and net increases in the floating debt. 73. In Paraguay, the public sector consists of the Central Government. the Public Enterprises, the Decentralized Agencies and the !hnicipalities.lJ The Public Enterprise subsector consists of goods and services supplying entities such as the electricity, teleconmunications and water and sewage administrations (ANDE, ATTELCO, and CORPOSANA) and the various transport agencies (railway, international and national airlines and the merchant fleet). On the revenue side, the attention of the international agencies assisting in Paraguay's development effort has focused on the Central Government's tax effort rather than on the tariff policies of these enterprises. However, the lJ The Central and Nlational Development Banl;s also form part of the public sector in a juridical sense, but are excluded from the sector for purposes of this analysis of investment and its financing. - 41 - latter-have been impressive; the earnings of the public enterprises increased from 4.1 to 5.1 percent of GDP over the 1967-70 period while, as a group, their savings increased from 20 to 32 percent of current outlays. Of the enterprises, the railway (PCAL) and the international airline (LAP)--as indicated, operate in the red but; in 1969, the combined deficits of these agencies amounted to only 1.1 percent of total public sector revenues. AIDE and AITELC0 generate the bulk of public enterprise savings, both of these agencies enjoying the full support of the Central Government for their rate policies. 74. The Central Government does make a substantial amount of current transfers--amounting to about 6 percent of its total revenues--and the bulk of these go to certain entities in the Decentralized Agency-subsector. These are essentially welfare entities; they include--inter-alia--the Social Security Institute (IPS), the Rural Welfare Institute (IDR), the Housing and Urbanization Institute (IPVU) and the Aftosa Eradication Service (SENALFA). Also included in this subsector is the National University, the single larges- current transfer recipient0 (The NTational University is the only independ- ently administered branch of Paraguay's public sc'1ool system; public primary and secondary education is administered and funded through the 1linistry of Education.) Despite the relatively large volume of current transfers received by the Decentralized Agencies subsector, its operations as a whole are not significantly in the red. This is because of the Social Security Institute which followJs sound actuarial policies and has been generating surpluses equal to about 40 percent of its current outlays. The Social Security Institute has invested heavily in public health facilities--which it operates as nart of its public health insurance program--as well as in earning assets such as hotels from which it receives a significant capital income. Apparently the Social Security Institute allocates its savings completely indemendent of any priorities set by development policy makers so that the National Development Bank, for example, has received none of these resources. The Governnent probably would be advised to subject Social Security investments to national priorities which--with all due respect to actuarial principles--could maximize tiheir development impact. 75. In boosting its revenues from 8.5 to 12.2 percent of GD? over the five years ending in 1969 the Central Government made sorne significant changes in tax structure: (a) import tax revenues declined from 48.8 to 37.5 percent of the total while the particination of excise tax revenues increased from 5.9 to 12.6 percent owing primarily to the installation in 1966 of a netro- leum refinery in Paraguay and the consequent transfer of the point of incidence of taxes on netroleum products;-(b) the participation of income and wealth taxes increased from 15.7 to 16.7 percent oxing largely to revaluation of the property tax base, increases in ')roperty tax rates and the introduction of a withheld at source income tax on interest earnings; (c) the participation of taxes on the transfer of cattle increased from 3.5 to 4.8 percent owing primarily to rate increases and to the introduction of an income tax substitute levied at the point of cattle transfer (see para. 28); (d) the participation of sales type taxes increased from 0.5 to 5.1 percent as a result of the introduction of a general sales tax in 1969; and (e) the participation of stamp taxes increased forom 6.1 to 11.1 percent as a resli of structural modifications and rate adjustments effected ii 1S6§' -nd !`. 76. Recently, in April 1971, after about a year's discussion, the Congress passed an incme tax reform. The new income tax legislation replaces bhe old schedular tax system with a global tax on personal and corporate income. The new system will tax progressively earnings from wages and salaries as well as income from abroad--categories previously exempted from any fonn of direct taxation. The new system is estimated to yield initially about $95 million additional revenue in 1971 and 0160 million by 1976. 77. Despite these substantial improvements, Paraguay's tax structure and fiscal administration retain many defects which obstruct the future growth of tax revenues, public savings and have a distortionary impac-b on the economy: (a) total revenues are heavily dependent on the taxation of consumer goods imports; the elasticity of import tax revenues to changes in GDP is likely to be unitary at best; elimination of certain categories of import tax exemptions as well as the reduction of tariffs on sumptuary imports such as alcoholic beverages with a view to making smuggling less profitable and *bo max- imizing revenues could improve this outlook; however, it should be noted that any measure which increases significantly the cost to the consumer of such sumptuaries could have a depressing effect on tourism since the availability of such goods at substantially lower prices than in neighboring countries is one of Paraguay's principal tourist attractions; (b) as indicated, the taxation of cattle transfer is inimical to herd development; a minimum solution would be to modify the specific nature of these taxes to take account of animal weight; (c) the 15-year monopoly conceded Paraguay's sole petroleum refinery channels a relatively small portion of high consumers petroleum products prices to the fisc, obstructing increases in these taxes; of the US$0.47 and US$0.32 per gallon consumers' prices for low octane gasoline and diesel fuel, respectively, taxes account for a modest 44 and 21 percent; (d) although property taxes are an important part of the tax structure, the Government has only partially completed a long delayed fiscal revaluation of urban properties and ha? not yet commenced the revaluation of rural property; and (e) the Central Governmenc's fiscal administration has been very inefficien-t as a result of inaccuracy in budgetary estimates, a lack of effective pre-audit, faulty accoun-V`in process and excessive decentralization of cash management. A new accounting law enacted in 1967 and aanienbents t' legislation governing budge-L formulatioy cszi - 43 - in 1968--both designed to strengthen fiscal administration-- have not yet been fully implemented. Such implementation is a necessary complement of the above described measures on the revenue side. 78. The Government has indicated its intent to CIAP (Inter-American Committee for the Alliance for Progress) to take a series of measures by year-end 1972, which will correct some of the above described fiscal deficiencies. Included in these measures is the already taken income tax reform. In addition, the Government plans to take the following measures: (a) reduction of import duties on sumptuaries; (b) fiscal revaluation of real property; (c) a reduction of tax exemptions; and (d) a full implementation of the Accounting and Budget Laws. Complete execution of these tax measures including the income tax reform is expected to yield about 500 million in additional tax revenues annually by calendar year 1976. 79. Problems with the elasticity of Paraguay's tax structure are especially important in view of the increased demand for public sector investment resources which can be anticipated over the next several years. With no changes in tax structure Central Government revenues are unlikely to increase more than proportionately with GDP over the 1971-76 period. Even the maintenance of unitary elasticity on the part of Central Gov- ermnent revenues assumes continued and substantial improvement in the administration of income and wealth taxes and realizatiion of a 1.7 percent demand elasticity for petroleum products. Import taxes--the most important revenue source--may keep up with GDP if improved administration of taxes on consumer goods imports offsets reduced taxation of capital and inter- mediate goods imports. Revenues from cattle taxes, stamp-. taxes and export taxes will increase less rapidly than GDP owing--in the first two instances- to the nature of respective tax bases and--in the last instance--to planned reduction of export tax rates. Total public sector revenues on the other hand may have an elasticity of almost 1.2 to changes in GDP over the 1971-76 period because of public enterprises such as ANDE, ANTELCO and the National Cement Company which will greatly expand their activities during these years. Current public expenditures will increase just as rapidly, however, owing to the additional services expected to be provided by the Central Government--aspecially in education--and by the public enterprises and decentralized agencies. This outlook will be improved, and public sector savings expanded samewhat more than proportionately with GDP, if the Gov- ernment takes the tax measures listed in the preceding paragraph - 44 - (i.e., reduction of import duties on sumptuaries, fiscal revaluation of real property and adjustments of petroleum tax rates). In contrast to this savings outlook, Paraguay's public sector agencies presently contemplate direct investments in economic and social infrastructure which, if made on schedule, would add up to 8.6 percenG of GDP over the 1971-75 period as compared to 5.3 percent during the 1966-70 period. Not only wiould such a sharp increase in public sector investments dramatically outstrip any feasible increase in public sector savings capacity but the unnecessary nature and/or questionable timing of many specific projects presently contemplated (e.g. railway rehabiliation) indicate that contemplated infrastructural investment levels could be scaled down so as to require neither substantial internal borrowing by the public sector nor recourse to large scale local cost financing by the external lenders. 80. If all projects presently contemplated were implemented on schedule and the external financing being sought by Government entities covering about 60 percent of their cost were obtained, net internal borrowing averaging almost one percent of GDP annually over the 1971-75 period probably would be required. By eliminating unnecessary new investmenb starts and adjusting the timing of others, this report recommends a public sector infrastructural investment program averaging 6.4 percent of GDP over the 1971-76 period. After external loan disbursements covering 62 percent of direct public sector investment costs, and making provision for public sector capital transfers to the BNF averaging 0.6 percent of GDP annually this program would require net internal borrowing by the public sector on the order of 0.2 percent of GDP annually over the 1971-76 period. Infrastructural investments averaging 6.4 percent of GDP would appear to be adequate to support the 6 percent overall economic growth path targeted for Paraguay by the Technical Planning Secretariat. Moreover, the transfer of public sector resources to the BLNF permitted by this recommended program would tend to ensure the availability of adequate local currency resources for purposes of the various development credit lines which appear to be in demand by the commodity producing sectors.- 1/ A public sector investment program formulated by the Technical Planning Secretariat for the 1971-75 period was recently approved by the Government. Under this program, public sector infrastructural investment would average about 7.4 percent of GDP annually. The most important difference between this program and that recommended in Paragraph 80 above is the more accelerated execution projected by the former for many of the investment projects involved. With a few important exceptions--such as the Puerto Presidente Stroessner Airoort and the Asuncion central market--the Planning Secretariat investment program contains no projects not also included >il. the 1971-76 program reccmmended by Bank S-a'f. MISSION RECC)ENDED PUBLIC INVEST4ENT PROGRAMI -millions of Guaranies) Average Annual 1971 1972 1973 1974 1975 1976 Total % GDP Current Surplus 3,091.6 3,430.9 3,497.3 3,655.3 4,031.4 4,116.4 21,822.9 4.0 Capital Income 100.0 100.0 100.0 100.0 100.0 100.0 600.0 0.1 Direct Investment -5,993.0 -6,205.5 -6,341.0 -5,974.5 -5,605.5 -4,50o.o -34,624.5 6.4 Agriculture 322.0 470.5 438.C 390.0 498.5 609.5 2,728.5 Energy 2,037.0 1,485.0 1,307.5 1,180.0 671.5 442.0 7,123.0 Transportation 1,830.0 1,957.0 2,263.0 2,370.0 2,521.5 1,610.0 12,551.5 Communications 270.0 410.0 615.5 397.0 - - 1,692.5 Education 72.5 515.0 405.5 379.5 540.0 540.0 2,450.5 Health 616.0 753.5 315.0 - - - 1,685.0 Housi g _ - 377. 377.0 402.0 377.0 1,533.0 OtherU 847.5 614.5 619.5 881.0 972.0 926.5 4,861.0 Capital Transfers -400.0 -400.0 -500.o -500.o -500.o -500.0 -2,800.0 0.5 Deficit -3,201.4 -3,074.6 -3,243.7 -2,719.2 -1,977.1 -788.6 -15,004.6 2.8 Dollar Financing 2,242.6 3,000.3 3,370.3 2,272.3 1,954.1 1,261.3 14,100.9 2.6 Disbursement (2,876.8) (3,644.5) (4,008.1) (2,979.9) (2,671.2) (1,931.0) (19,111.0) Amortization (-634.2) (-644.2) (-637.8) (-707.6) (-717.1) (-669.7) (-4,010.6) External Gurafni Financing i 460.5 143.5 245.0 -161.0 -410.5 -274.0 3.5 Disbursement (695.0) (617.0) (601.5) (295.0) (75.5) (189.0) (2,473.0) Amortization (-234-5) (-473.5) (-356-5) (-456.0) (-486.0) (-463-0) (2,469-5) Internal Financing 498.3 -69.2 371.6 607.9 433.5 -198.7 900.2 0.2 1/ The sources of these numbers are Tables 5.1-5.5 in the Statistical Appendix. Table 5.2 gives a comparison of the public investments projected above with those that would be made over the 1071-75 nerlod if all investi.ent projects contemplated by the various agencies were carried out as well as with the investment program formulated by the Technical Planning Secretariat. 2/ Includes industry, municipalities, general services and other non-project investments. 3J Loans from local currency holdings of the Inter-American Development Bank and PL-480 funds. -46- 81. Investment in transport would constitute 37.5 percent of total public sector direct investment over the 1971-76 period and the Ministry of Public Works would execute most of the projects involved. Major on- going and new highway projects have already been discussed above (para.67); execution of the IBRD-financed Plan Triangulo road paving project has been incorporated amongst the investments to be executed by the Ministry of Public Works. The inclusion of the Triangulo Project in the recommended investment program assumes that the Government will eschew any significant investment in railways rehabilitation since such investment would be com- petitive with the Triangulo project. As noted, railway rehabilitation has been demonstrated to be the high cost solution for the transport neede of the Triangulo region and is, therefore, excluded from this investment projection. The contemplated construction of an international airport at Puerto Presidente Stroessner and of several small port facilities on the Parana and Paraguay rivers have also been excluded from this transport investment projection, and it is further assumed that no significant investment in improved river navigability will prove feasible in the medium-term. The construction of a number of unpFved secondary and feeder roads having a small foreign exchange component is also excluded from the recommended investment program. If the tax outlook implicit in the overall investment projection (table 5.1) is improved as a result of the government taking measures such as described in paragraph 77, the incremental revenue could be devoted to the Ministry of Public Works for the implementation of such road program. 82. The development program of ANDE--the state electricity administration--has already been discussed (para. 69). Its investment would constitute 22.5 percent of total public sector direct investment for the period 1971-76. However, in addition to completion of the installatIon of the Acaray hydroelectric plant and related transmission and inter- connection facilities, ANDE contemplates a rural electrification program which hps been excluded from this investment projection. Since rural electrification would yield low financial rates of return, ANDE will not undertake this program unless very long-term external financing is avail- able for it. The international lenders might consider financing such a program subsequent to 1976 by which time development of agroindustry and primary agricultural output may increase substantially rural demand for electric energy. Also excluded from this investment projection are the possible international Guaira Falls (Sete Quedas) and Apipe Rapids hydroelectric projects, first because they are unlikely to get underway before 1977 and second because in any event they are unlikely to claim any of Paraguay's own savings resources. Obviously, however, for the years immediately after 1976, these projects loom very lprge in Paraguay s development outlook. 83. All education investments presently contemplated by the Gov- ernment are incorporated in this investment projecticn. Investments in primary and secondary education are to be made in accordance with a 1Q60AJ development program devised by the Ministry of Education and Culture. , the primary level this program calls for improving the quality of educ.. jn.- especially in the interior--and for increasing matriculations as a peIn-;g.-e - 47 - of the 7-14 year old population from 79 to 93 percent. The latter is aimed essentially, at improving Paraguay7s 17.4 percent primary school retention rate. It should be noted that this program does not envisage increasing annual primary school class time above the present 600 hours; in other words, facilities will continue to be operated on a two or even three shift basis. At the secondary level the program concentrates on the creation of technical and vocational training facilities, on the improvemen i. of teacher-training and on classroom expansion and modernization such thaL secondary school matriculations would be increased as a percentage of the 12-18 year old age group from 15.3 to 33.3 percent. Paraguay presently suffers from a severe secondary school classroom shortage; no new seconday- school buildings have been constructed in Asuncion for 16 years, for exancle. The IBRD is considering a loan for part of the first phase of the secondary school program which calls for the construction and equipment of seven comprehensive high schools and for the extension and reequipment of two others as well as for the installation of one and the modernization of another vocational school. As part of a general agricultural development credit the IDB is considering a loan for the installation of several agri- cultural training schools at the secondary level. 84. As in education, investments in agriculture would sharply increa.-: under this projection of direct public sector investments. The Ministry of Agriculture and Livestock would execute most of the agricultural projc';! involved. All of the Ministryts projects represent new starts rather than ongoing programs. They include: the construction of local dry storage as well as centralized freezer storage facilities; the equipping of forestry, agricultural extension and seed production services, the construction of local marketing facilities, and the implementation of a Fire Ant Eradication Program. Ongoing resettlement and aftosa programs are being aPiministered by the Rural i-Jelfare Institute (IBR) and the National Aftosa Eradication Service (SEHALFA). The IBR plans an important new start, namely the undertaking of an intensive effort to bring farmers resettled in the area served by the Asuncion-Puerto Presidente Stroessner Road into the markets economy by providing them with access to some agricultural machinery and organizing them in efficient producing and marketing units. Save for thie construction of a large central marketing facility in Asuncion--which will not be justified until local storage and marketing facilities have been improved greatly--all agricultural projects presently contemplated by respective public agencies are accommodated by this investment projectiazi. 85. Other important components of projected direct public sector investments are the ongoing Asuncion water and sewage program, the ongoing program to expand local and long distance telephone, radio-telephone and telex facilities, a new project to incorporate Paraguay into the Inter- American Telecommunications Network (by installing radio-telephone links with Argentina and Brazil) and the undertaking of the second phase of Paraguayis housing and urban development program. Excluded from the - 48 - projection are projects to improve water and sewage facilities in several interior towns, to install a communica-tions satellite station and to create an educational television network in the interior. Like the ANDE rural electrification program thesf/are all projects which might well be executed subsequent to 1976.- Table 5.2 in the Statistical Appendix lists all of the new investment starts incorporated in this direct public sector investment program which are suitable for external financing. This list also includes commodity producing sector investment projects suitable for financing by the external lenders either through the intermediation of the National Development Bank or directly. 1/ The State Sani-bary Corporation (CORPOSANA) and the Ministry of Public Health are at present discussing the timing and which of the two agencies could execute a rural and water sewage project. Until such issues are settled, this project is excluded from the investment program. The installation of an educational television network in the interior is not only excluded from the 1969-70 develop- ment program of the Ministry of Education but, in any case, would have to await progress with rural electrification. - 49 - IV. MOITETARY VI4AAGMENT 86. In Paraguay, bank credit has expanded much more rapidly than has the nominal value of GDP in recent years; from the equivalent of 13.8 per- cent of GIF at the close of 1964 bank credit rose to 25 percent of GDP at the end of 1969. There was some deceleration of this rate of expansion in 1970, as the Central Bank imposed limits on import financing by the commercial banks as well as upon the use of suppliers' credits by the National Development Bank to finance the capital goods imports of its final borrowers. Nevertheless, the stock of bank credit is expected to reach 25.6 percent by the end of 1970. Bank credit to the public sector has not fluctuated widely; instead, the private sector has been the primary beneficiary of this rapid expansion, bank credit outstanding with it having increased from 10.5 percent of GrP at end 1964 to an estimated 22 percent of GDP at end 1970. Most of the expansion appears to have been in response to real credit demand, some net foreign reserve loss, as in 1969 when credit was probably used to finance speculative imported inventory build up, may be attributable to rapid credit expansion but such losses have been far less than proportionate to relative increases in the supply of credit to the economy and, moreover, are now being reversed. Depositors' interest rates of 8 percent on most time deposits have been an important factor in the financing of Paraguayan credit expansion. VIhile currency and demand deposits have remained almost constant as a percentage of GDP over the 1964-70 period, time deposits have more than doubled in relative terms, increasing from 4.6 to 9.7 percent of GrP. An even more important source of credit financing, however, have been the medium and long-term foreign credits to which the BNF has been authorized to have access; these liabilities have increased from 0.7 to 6.9 percent of GDP over the 1964-70 period. - 50 - CONSOIJDATED PCCGTS, PARAGUAY BPffLNG SYSTEi (as percent of GDP) 1964 1965 1966 1967 1968 1969 1970 Net Foreign Reserves o.k 1.4 1.1 - -o04 -1.0 O0. Net Domestic Credit 13.8 14.9 16.8 19.8 22.8 25.0 25.6 Public Sector T7 T 77 T TT T2T 4T Private Sector 10.5 11.8 13.9 i6.5 18.3 20.8 22.0 M-liscellaneous -2.1 -2.1 -1.8 -1.8 -1.3 -1.5 -1.8 Liabilities to Foreign Banks 0-7 2.9 2.8 3.8 5.1 6.o 6.9 Monetary Liabilities 13.5 14.4 15.1 16.0 17.3 18.0 18.8 Mloney .T 8.4 r -9 r n 9.1 Quasi Money 4.6 5.5 6.5 7.6 8.7 9.5 9.7 Source: Central Bank of Paraguay. 87. Paraguayts banking legislaticn is adin=istered by the Central. Ban3k through its Superintendency of Banks. The Central Bank also handles official exchange transactions and is the repository of fiscal resources. The comnercial banks are nine in nurber, of which seven are foreign and all are headcuartered in AsuncLon with rvery few branches elsetwhere ir +the corr- try. The system is coTpleted by the National Development Bank, estab- lished i-n 1961--together with the Central Bank--to replace the defunct Bank cf Paraguay. 86. m Paraguay commercial bank loan portfolios are concentrated in current trade-related transactions. At the end of 1969, about 66 per- cent of comrrercial bank loans are shown to have been outstanding in the tIcornercialtr sector while most of the remainder were destined to the financing of imports and exports of industrial firms. The Central Bank has attempted to force the coryercial banks to direct more of their resources into productive activities by prohibiting all consumer durable import financing of more than 120 day term, prohibiting entirely com- mercial bank financing of sumptuary goods imports, limiting the use by the banks of external credit to finance imports and, as of March 2, 1970 requiring each bank to reduce gradually its import financimng to 30 percenrt of portfolio. Until the present, however, not only all of the investment credit but the bulk of working capital credit made available to the commodity producing sectors by the banking system comes from the BNE. Whereas 48.8 percent of total private sector credit as of end-1969 ori- ginated with the BIF, some 72.7 percent of credit to agriculture, live- stock and industry had been provided by this institution. ORIGIN OF PRIVATE SECTOR CREDIT, DECEMBER 1969 (millioirs, percent of totalacreditT v-P, q-- Cientrail ' CMCL Bank:; E7-.F ,? ,ra Bank Total Agriculture 41 0.3 ?, C8 19 .3 383 2.6 - - 3,228 22.2 iivestock 587 4,0 2,J lh.OJ 91 o.6 - - 2g714 18.; Industry 1,i-h4 7.0 1,60o 11.5 318 2.2 - - 3,002 2G. commerce 3,975 27.4 459 3.2 64 0.4 - - 44501 31.:. Construction 115 0.8 - - 45 0.3 - _ 160 1.2 orestry - - 62 O.4 - - - - 62 0O Other 331 2.3 51 o-4 176 1.2 - - 558 3. ^ Central Bank Employees - - - - - - 295 2.0 295 c2.0C TOTAL 6,o66 41.8 7,083 48.8 l,076 7.4 295 2M0 14,520 100.0C 1/ The gradual liquidation of the as; ets and liabilities of the ex.-Bank of Paraguay is ad,ministered by- the Ce:ltral Bank. The ican portfolio of this bank remains an inpot-`ant element in total credit now outstanding. 2/ Includes IBRD-funded Fondo Ganadero livestock credit. Cource: Central Bank of Paraguay. 89. Commercial bank financial charges in Paraguay are very high; borrowerst interest rates range between 15 and 24 percent per year as com- -cared to a rate of internal price increase which has not exceeded 2 percent per annum in the last decade. These interest rates are essentially a functicie of a series of factors that ele'vate the cost of credit. In the first place, the banks pay 8 percent to depcsitors for time and savings deposits which, together, account for some two-thirds of their total deposits. (The predonil- nance of term deposits can be explained in part by the practice that has gr(A-rn Up of permitting depositors to use such deposits as if they were current accounts.) Secondly, the cost of money to the banks has been elevated by the need to maintain a minimum legal reserve of 42 percent against all deposits, and the fact that their reserve deposits earn no interest. Taken together, these two factors mean that--on average--Guarani deposits cost the commere-_al ~.anks about 10 percent per year,-/ administrative costs add another 4 perce.t to this amount. Commercial bank borrowierts interest rates are limited to 12 percent per annum but the banks are authorized to charge commission fees of 2 percent or more on each loan. To make profits, therefore, the banks maxir! ze the frequency of application of commission fees by limiting the term of their loans to 90-180 days. Over and above the return to the banks, a tax of 0.5 percent is imposed on each loan. The fact that commercial bank loans are sometimes available at total borrowers rates as low as 15 percent reflects ; 4 Time and savings deposits are about 67 percent of total; total bank reserves--including free reserves--usually amount to about )v5 perc.sr.a o deposits, thus 8 (.67) - (100 - 4) = 9.7 percent. - 52 - use by the banks of various devices such as: linkage of lending to exchange operations (on which the banks can charge a commission); and the use of short-term foreign funds to finance export credit (and thereby circumvent the high cost of Guaranies). In fact the high cost to the banks of Guaranies has stimulated parallel financial activities in which the banks or other intermediaries bring suppliers of funds and final borrowers into direct contact, thereby avoiding the legal reserve require- ment. The Central Bank presently lacks legal authority to control the operations of such non-bank intermediaries, but new legislation to extend. the powers of the Central Bank is under consideration. 90. The 42 percent legal reserve requirement was established as a means of curbing the growth of the money supply; the monetary authorities have relied almost exclusively on this tool in their efforts to assure internal financial stability, maintain the value of the Guarani and protect Paraguayls slender foreign exchange reserves. Given their over- riding concern with managing the volume of money, the authorities have not sought to use the reserve requirement mechanism as a means of influencing the distribution of credit. Nevertheless, it is important that attention be paid to the possibilities which exist of adapting the reserve requirement mechanism so that it may in the future be used to help increase the avail- ability of credit to the productive sectors, and lower its cost, while continuing to serve effectively to prevent excessive expansion of the money supply. For example, the cost of credit could be reduced by a decision on the part of the Central Bank to pay interest on commercial bank reserve deposits. These deposits could also be used to refinance commercial bank loans and thus reduce the cost of commercial bank credit and improve its allocation simultaneausly. However, the expansion of Central Bank credit this would entail, taken together with the projected increase in the Central Bank's foreign assets, could pose the problem of excessive currency emission. One solution would be the introduction of a marginal reserve requirement greater than 42 percent on increases in private deposits captured by the commercial banks with the explicit understanding that all of these additional reserves would be available to refinance credit extended to the commodity producing sectors. 91. Borrowerts interest rates charged by the BNF range from 9 to 12 percent. In addition, these loans bear commission and tax charges of 0.5 percent each. Reference has already been made at various points in this report to the nature of BNF operations. Briefly, the BNF is orga- nized around three operating departments which administer the following lines of credit: (a) the Agro-Pastoral Department: administers a line of invest- ment and working capital credit to small-medium sized farmerc and ranchers largely funded by the IDBE also administers a line of investment and working capital credit to '"entre- preneurial agriculture" (i.e., large crop farmers, also kncaru'. as the wheat program) largely funded by AID, the Eximbank and by the suppliers of imported agricultural machinery; - 53 - (b) the Development Department: administers lines of indus-rilj (including tourism superstructure, to a limited extent) investment credit funded by the Kreditanstalt and by the IDB; also administered the IBRD-financed livestock devel- opment program (large ranchers) until 1969; this latter program is now administered by an independent agency utilizing BIF technicians and accounting facilities; and (c) the Commercial Department: which administers BNF deposit accounts and makes wTorking capital loans, largely to clients of the Agropastoral and Development Departments. 92, Although in difficulties with the wheat program (see para. 18), the BNF has played a crucially important role in promoting Paraguayan development and certainly stands to influence greatly the future of the economy. The BNF's own operational projection--which incorporates credits now being negotiated with the IDB and the Kreditanstalt and is optimistie with regard to deposit accumulation--shows no net loan expansion after 1973 in contrast to average annual expansions equal to 1.5 percent of GDP over the 1965-70 period and to projected expansions of similar proportion during 1971-73. This projection has been incorporated--as is--by the Planning Secretariat into its proposed development program and very little allowance has been made for the transfer of public sector resources to the BNF. IWhile the BNF is likely to be able to obtain additional external credits for some ongoing credit lines, such as for small and medium agri- culture and livestock and for industry it needs other sources of external funding for its "entrepreneurial agriculture" program, in order to supplant the suppliers credits and to supplement the tied AID credits wjhich have fmcn3'-i this program to date. 1loreover, as indicated above, demand appears to exist for several new BMF credit lines not envisaged in its own projection; namely: (1) a line of forest industry credit (see para. 35); (ii) a line of credit for larger scale tourism superstructure projects (see para. 51); and (iii) a line of credit for the establishment of additional oilseed processing facilities (see para. 48). 93. In order to make external support for all of these credit lines feasible, however, the Central Government should make capital transfers to the BNF of sufficient magnitude to offset the losses resulting from the wheat program and other operations and in general, to ensure that the internal savings available to the BNF are sufficient to cover the local cot component of the projects it finances. It is for this reason that capit-al transfers to the BNF ranging between US$3 and 4 million annually have beer built into the projection of public sector investment and its financing described in the preceding section of this report. The Government took E first major step toward providing the BNF with the additional resources _`-; so badly needs with the prcmulgation in April of this year of a decree authorizing the Central Bank to (1) advance p4200 million to the BNF agai! ` scheduled Treasury capital contributions and (2) purchase 4250 million oI BNF bonds. The Central Bank reportedly intends to resell the bonds t.i th; commercial banks. In addition to these funds, which would be available -to finance ongoing BNF programs, the Central Bank would also, as discusseri earlier (para. 29), make a special line of credit available to -the BM7 to fitiance working capital loans to ranchers. - 54 - 93a. With particular respect to the wheat program, the BNF probably should consolidate this operation within its present dimensions--that is eschew any expansion of the program until such time until the profit- ability of mechanized double crop agriculture has been demonstrated-- before seeking foreign credits to finance an increase in the hectarage of mechanized production. This is not to say that the BNF can be expected to abstain entirely from dollar outlays for mechanized agriculture during the consolidation period; much of the agricultural machinery imported for the program already needs to be replaced and there is an on- going requirement for fertilizer and pesticide imports. 94. Assuming that the Gcovernment does transfer US$3 to 4 million annually to the BNF, that the wheat program is consolidated within two to three years and that external financing is obtained for all of the credit lines mentioned above, expansion of BNF credit to the commodity producing sectors could be expected to average 1.6 percent of GDP over the 1971-76 period. During this same period disbursements of external credit to the BNF would average US$11.8 million annually compared to the US$25.3 million in average annual disbursements allocated to the direct investment program of the public sector. .NATIWM'L. DEVELOPMENT BANK CREDIT EXPANSION (millions 1969 T) 1971 1972 1973 19.74 1975 1976. Private Sector Credit 1,201 1,032 1,236 1,436 2,249 1,604 E~cpansion Financing 1/ 1 201 1 032 1 236 1 436 2 249 1 604 Long-term loans (net)- I 9 1T 71 '661 Misbursements (1,1413) (1,641) (1,232)(1,156)(2,174)(1,544) Amortization (-354) (-354) (-451) (-475) (-480) (-495-1 Net Foreign Reserves -200 -710 - - - (- = decrease) Capital Transfers 400 400 500 500 500 500 Public Sector Deposits 100 100 100 100 100 100 Operations with Central Bank -188 -45 -145 155 -45 -L45 it scellaneous Assets - - - - - - 1/ Includes amortization of and disbursements from Guarani loans by external agencies. Source: IBRD staff projection. 95. The Government will be confronted with difficult problems of monetary management during the next few years as it is faced simulta- neously with the needs of: (i) assuring that overall increases in the supply of credit are consistent with achievement of a 6 percent growth path; (ii) reducing the cost of commercial bank credit and modifying its distribution in favor of the commodity producing sectors; (iii) accom- modating occasional demands for internal credit by the public sector (although public sector internal credit demand for the 1971-76 period as a whole may be appropriately restrained, there are likely to be significant variations in the stock of such credit during the period paralleling variations in the level of public sector investment activity); (iv) accommodating needed increases in Paraguay's net international liquidity; and (v) avoiding monetary pressure on the price level. Assumti_-, however, that the propensity of the public to accumulate savings in the banking system continues to follow the trend established in the 1960!s and that external financing is made available to the BITF as projected in the preceding paragraph the Government should be able to satisfy these requirements. The followring table projects Paraguayan bank credit by origin, destination and financing over the 1971-76 period; it shows net domestic credit expanding at an average annual rate of 10.5 percent while reserves are built-up from nil to the ecuivalent of four months' imports. W,ith public sector credit expansion held to the equivalent of an average annual 0.2 percent of GEP over the period (see para. 69), bank credit to the private sector should increase almost twice as rapidly as GDP, which should be sufficient if the allocation of such credit is improved so that the commodity producing sectors receive a substantially larger share relative to cammerce than in the past. PROJECTIOII OF BANK CREDIT BY ORIGIN, DESTINATION AND FINANCING 196 -1970 - millions current 0;/ 197 1-76 million 1969777 Average nual 1964 1970 1971 1972 1973 1974 1975, 1976 1970-74 1976-70 Origin 7,103 18 856 19 88o 20 625 21 887 24 957 28 999 34 287 17.7 10.5 Central Banlc m3, 5, 4,441 5 458 6 253 8,732 7.2 National Developme~ Bank 619 6,318 7,262 7,894 8,730 9,466 11,215 12,319 L7.3 11.8 a. Total CreditJ (768) (6,686) (7,487) (8,119) (8,855) (9,791) (11,54o) (12,644) b. Operations with Central Bank (-149) (-368) (-225) (-225) (-125) (-325) (-325) (-325) Commercial Banks 2,771 6,843 7,126 7,559 8,716 10,033 11,531 13,236 16.3 11.6 a. Total Credit (2,860) (7,175) (7,315) (7,913) (8,910) (10,536) (12,206) (14,111) b. Operations with Central Bank (-89) (-332) (-189) (-354) (-194) (-503) (-675) (-075) Interbank Float -46 - - - - - - - Destination 7,103 18,856 19,880 20,625 21,887 24,947 28,999 34,287 17.7 10.5 Public Sector 2,785 3,974 4,972 4,402 4,031 4,639 5,073 4,874 6.1 3.5 Private Sector 5,372 16,167 17,408 18,8883 20,951 23,793 27,502 30,771 20.2 11.3 Miscellaneous Accounts -1,054 -1,285 -2,000 -2,665 -3,o95 -3,475 -3,576 -1,358 Financing 7 103 18 856 19 880 20 625 21,887 24 957 28 999 34 287 17.7 l0. i Long Term Foreign Liabilities 3 5,07 6,146 7,433 ,214 o ,895TT Net International Reserves -205 -55 -1,997 -4,661 -6,579 -6,901 -7,592 -6,788 Money 4,548 6,687 7,188 7,727 8,346 9,014 9,735 10,516 6.6 7.8 a. Currency (2,624) (3,846) (4,134) (4,444) (4,800) (5,184) (5,599) (6,o49) (6.6) (7.8) b. Demand Deposits (1,924) (2,841) (3,054) (3,283) (3,546) (3,830) (4,136) (4,467) (6.7) (7.8) Quasi Money 2,385 7,167 8,543 10,126 11,906 13,949 16,267 18,921 20.1 17.6 a. Time and Savings Deposits (1,54) (¸,429) (6,593) (7,953) (9,476) (11,247) (13,252) (15,573) (24.2) (19.3) b. Other (831) (1,738) (1,9q0) (2,173) (2,430) (2,702) (3,015) (3,348) (13.1) w±.-5) 1/ The consumer price index indicates little if any change in the internal price level from 1969 to 1970. 2/ Capital transfers to the BNF are treated as offsets to the BNF's net domestic credit exnansion. Source: Central Bank of Paraguay and IBRD staff projection. - 57 - V. BALANCE OF PAYMENTS A. RECENT TRENDS IN THE BALANCE OF PAYMENTS 96. During the late sixties Paraguay experienced sharp deterioration in its trade account. Imports, wrhich had increased at an average annual pace of about 3 percent since the mid-fifties, averaging 15 percent of GDP over the 1955-64 period, increased by 10 percent annually over the 1965-69 period, averaging 17.6 percent of GDP during these yeers. Recent increases in the import bill have been related to the above described intensification of the public sector investment effort, to an upsurge in the overt and clandestine importation of finished consumer goods and to a certain amount of speculative stockpiling of intermediate goods imports. IMPORTS OF GOODS AND NON-FACTOR SERVICES (in millions of US9) 1964 1965 1966 1967 1968 1969 1970 Pre. (Est.) Goods (FOB) 50.0 56.7 63.2 65.7 73.5 81.2 70.0 Capital Goods 8.1 15.6 16.5 20.b 22.0 26.7 19.5 Intermediate Goods 7.8 8.7 10.3 11t.9 12.0 12.0 12.0 Fuels and Lubricants 4.1 4.9 4.5 3.8 4.9 145 5.0 Consumer Goods 30.0 27.6 31.9 26.6 34.7 38.0 33.5 Tourism 2.1 3.1 3.8 4.5 1.8 4.9 5.5 Non-Factor Services 12.6 1505 11.7 12.6 15.8 18.9 15.0 TOTAL 64.7 75.4 78.8 82.8 94.1 105.0 90.5 Source: Table 3.4, Statistical Appendix. 97- Exports had increased rapidly during the first half of the "sixties"--reaching 16.1 percent of GDP in 1965--but dropped off sharply during 1966-69; the export coefficient averaging only 13.2 percent durinig these years. Deterioration in the volume, price and composition of Paraguayan beef exports was the principal reason for this decline. Jith th^- high world beef prices prevailing in the mid-sixties several frozen beef processors installed themselves temporarily in Paraguay, increasing internal competition for live beef and raising internal producers' prices. WJith subsequent declines in world frozen beef prices, these processors disappeared leaving the market to the traditional corned beef and beef extract processors who, with no internal competition and confronting price declines in their own external markets, reduced internal producers' prices. The result was an overall drop in export slaughter--at least in certain years--and return to the historical concentration on corned beef and beef extract which earned lower returns per live beef unit than frozen beef would have earned. In addition to its problems with beef, Paraguay also experienced increasing ccmpetition from synthetic substitutes for quebrachc extract and a decline in its exports of this important product as well as stagnation with respect to its other commodity exports, the latter reflect- ing both internal supply bottlenecks and, in the case of lumber, trade obstacles in Argentina--Paraguay's principal external market--to imports in processed form. 98. There has been one dynamic element in Paraguay's export perform- ance; tourism earnings have increased at an annual rate of about 35 percent since 1964 (see para. 50). However, the expansion of gross tourism earnings has had an offsetting impact on the import bill, partially accounting for the increases in consumer goods imports shown above. - 59 - EXPORTS OF GOODS AND NON-FACTOR SERVICES (in millions of US-) 1/ 1964 1965 1966 1967 1966 1969 1970 Total Commodities (FOB) 54.7 63.0 5h.3 53.1 52.3 59.2 67sO Livestock Products 20.h 24.9 20o7 2L.0 19c3 18J1 22,3 Canned Beef (12.h) (14.2) (11.8) (16.4) (1347) (12.3) (10.0, Frozen Beef (101) (3.6) (0.8) (0.1) (-) (0.8) (7,3) Beef Extract (3-5) (3-4) (3.6) (2.8) (2.2) (1.2) (1.3) Other2/ (3.4) (3*7) (45) (4h7) (3.h) (3.8) (4.0) EWood Products 11.6 13.8 14.6 10.3 10.6 15.2 1h.6 Logs ( (5.8) (7.8) (9.2) (6.7) (5.9) (6.9) (6.6) Sawn Lumber (1.8) (2.L) (2.2) (1.5) (2.3) (5.7) (5.2) Manufactures (-) (O¢l) (0.1) (0O1) (03) (0.7) (6.8) Quebracho Extract (4.0) (3.5) (3.1) (2.0) (2.1) (1.9) (2.0) 3/ Agricultural Products- 20.9 22.5 17.8 18.0 20.1 2)41 27,2 Other Commodities 1.8 1.8 1.2 0.8 2.4 1.8 2e9 Tourism 2.6 3.0 3.6 4.9 8.1 13.3 16.0 Non-Factor Services 4.2 5,4 3.8 4.3 500 5.6 6..4 TOTAL 61.3 71.4 61.7 62.h 65.3 78.1 89.;4 1/ Estimated real FOB values as opposed to the arbitrary aforo values assessed by the Goveimment for fiscal purposes. 2/ Includes: beef by-products, horse meat and hides and skins. 3/ Includes: tobacco; cotton; yerba mate; fresh fruits and vegetables; canned fruit; vegetable oils; pellets and expellers; essential oils; coffee and canned palm heart. Source: Central Bank and IBRD staff estimates. - 60 - 99 As the above tables show, there were departures from these iaport and export trends in 1970. Commodity imports declined by 14 percent vis-a-vis 1969 owing to a drop off in the pace of public investment, to newly imposed controls on commercial bank financing of consumer goods imports (see para. 89) and to a hiatus in the importation by the National Development Bank of agricultural machinery for its mechanized agriculture program. Commodity exports, on the other hand, appear to have increased by about 13 percent vis-a-vis 1969, largely on account of increases in world beef prices and the re-emergence of frozen beef processing in Paraglla3 The renewed competition for live beef brought about by the installation of new frozen beef processing facilities in Paraguay in 1969 and 1970 has had an effect which differs in one important respect from the situation prevailing at the time of the previous peak in world beef prices in 1965; it has induced the traditional export processors to modify their own practices so as to improve value weight relationships. Thus about 10 per- cent of the canned beef exported by Paraguay in 1970 was in the form of higher value cubed rather than corned beef and this percentage is likely to increase substantially in 1971. Also, the newly established frozen beef processors--in terms of the quality and cost of the facilities in which they have invested--appear to be settled much more firmly in Paraguay than were their predecessors in 1965. I1MEX OF EXPORT BEEF PRICES (1964 corned beef price = lo0)/ 1964 1965 1966 1967 1968 1969 1970 Corned Beef 100.0 109.1 113.1 116.7 120.8 115.5 122.h Frozen Beef 72.3 93.4 95.8 81.7 80.3 76.5 9W56 1/ Owing to the system of arbitrary valuation of Paraguayan exports for fiscal purposes no series on actual Paraguayan beef export prices are available. Thus, on the assumption that movements in these prices have paralleled those of Argentine beef export prices, this index of the latter is used as a proxy for Paraguayan beef export price move- ments. The index is also designed to show the relationship between export prices for beef exported in frozen form as opposed to beef exported corned. - 61 - 100. In addition to net resource gaps averaging L.6 percent of GDF over the 1966-69 period, Paraguay had to finance net factor payments averaging about 0.8 percent of GDP. Although direct foreign investment, official donations to Paraguayan welfare agencies and the drawdowm of net foreign reserves covered a significant portion of these capital requirements, the bulk of them were met by net long-term external credits (i.e. disbursements net of amortization). Moreover, of this lending the major portion wias provided by foreign governments and the multilateral lending agencies on very favorable terms, including provision for repayme't- in Guaranies in many cases. Thus, while long-term loan disbursements net of dollar amortization payments totalled US$79.6 million over the 1966-69 period, Paraguay's dollar denominated debt increased by US$62.7 million to a total outstanding (excluding undisbursed) of US$89.5 million as of end 1969. The average interest rate applicable to this outstanding dollEi debt was only 3.9 percent while amortization payments due in 1970 amounted to less than 10 percent of the total so that the ratio of service on the debt to goods and non-factor services export earnings in 1970 amounted tc a relatively modest 13.5 percent. Despite this strong support by the external lenders, however, Paraguay's net foreign reserves were drawn donl to a negative US.1 million by end 1969. Although a balance of paymentc surplus was achieved in 1970, Paraguay's net reserves totalled only US$o.4 million as of the end of that year. - 62 - BALANCE OF PAYMENTS, 196h-70 (in US= millions) -~ - 1964 1965 '966 1967 1968 1969 1970 P.esource Gap -3.4 -4.0 -17.0 -20.0 -28.8 -26.9 -27. Imports -Z177 -75.k -78.8 8=2 -9. =1 -105.0 -%i. Exports 61.3 71.4 61.7 62.4 65.3 78.1 89 1. Fector Paym~ents (net) -1.7 -2e6 .3.3 -3.7 -3.6 -572 -7. Dividends Paid -0.7 -172 -2.0 7-7. -1.2 -1.5 -2.-, Interest Paid -1.2 -1.7 -1.8 -2.2 -3.4 -h.6 -5.5 Public and Public Guarantee (-0.9) (-1.0) (-1.0) (-1.2) -1.6) (-2.O)(-3..-8 Private 1/ M07 3 -0.7 (-06 -1 7.C Interest Received - 0.2 0.3 0. O.5 0.3 O.k Transfer Payments 0.2 0,1 0.3 0.7 0,5 0,5 (I L G'arrent Account Balance -5.1 -6,6 -20.3 -23.7 -32.h -3201 -62 Other Capital Flows (net) 7.2 7.2 L.2 -0.4 6.8 h.6 8,C) Donations 3.3 3.5 -7 2.1 -T 2.7 2.v Direct Investment 4.3 4.2 2.9 3.6 2.5 5.6 5.G Short-Term Capital 2/ -o.4 -0o.5 -0O.5 -6.1 19 -3.7 -2.2 Special Drawing Rights - - - - - - MI Long-Term Loans 2.3 2.4 13,0 19.9 22.3 2h.h 5.8 Disbursements T 9.1 17.7 . 'F 29,7 l7-. Bilateral (2.2) (1.6) (3.9) (2.0) (5,7) (9.6) %3*L 11ultilateral (3.0) (7.1) (11.0) (13.5) (1o5) (1 105) (1C.1) Banks and Suppliers (0.1) (O.L) (2.8) (8.6) (7.9) (8,6) '2.!2 Amortization -3.0 -6.7 -4r7 -4.2 -5.8 -5.3 -9.5 iqet Foreign Reserves -4.4 -3.0 3.0 h.2 303 3.1 ¸.5 increase) 1/ Includes--inter-alia--interest on short-term external credits obtained by the commercial banks which are incorporated in the net foreign resernre position. 2,' Includes "errors and omissions". Source: Table 3.1, Statistical Appendix. - 63 - B. FOPEIGNJ TRADE POLICES .ND ISSUES 101. Paraguay has very few quantitative import restrictions and its effective taxation of imports is low. Intermediate and capital goods imports are exempted on a case by case basis from scheduled tariffs under legislation encouraging the development of local industry and such exemption wiould be made more automatic by draft legislation either entirely exempting or providing a 95 percent drawback from duties on the importation of in- puts used in export production. While the overall statutory tax rate on finished consumer goods imports is estimated at 90 to 110 percent the effective taxation of such imports averages about 25 percent, the wide variation between theoretical and effective incidence being attributable to smuggling and to the loose enforcement of import tax exemptions. The need for increasing effective levels of finished consumer goods import taxation is primarily fiscal in nature, but the Government must balance its need for increasing fiscal revenues against the negative impact on tourism earnings which would be had by sharp increases in the consumer prices of alcoholic beverages, radios and phonographs, etc. The Gov- ernment contemplates reducing the statutory rates on such items with a view to reducing the incentive for smuggling and maximizing revenue just as it apparently intends to tighten exemptions from automobile import duties presently conceded to a wide variety of Paraguayan entities. Pa- raguayan industries requiring protection include the textile, flour mill, cigarette, cement and petroleum industries, the first four of which pro- cess locally produced raw materials. Effective protection of the first two of these industries is too low but can only be increased if the Gov- ernment adopts effective administrative measures to control the smuggling of competitive products into the country. 102. Besides being subjected to a very cumbersome licensing procedure, exports also pay a wzide variety of taxes which vary from about 3 to about 13 percent of arbitrarily assessed "aforolt values and tend to serve as substitutes for income taxation. These same 'taforo" values also specify the amount of foreign exchange which exporters are statutorily required to surrender to Paraguay's banking system; the commercial banks are authorized to retain two-thirds of such surrenders while the Central Bank receives the remainder. Real export values tend to exceed substantially the assessed ilaforoir values, the difference presently ranging as high as 30 percent for some export commodities such as beef. Prior to January 1971 exporters could surrender foreign exchange in the excess of the amount calculated on the basis of the aforo prices, with the purpose of using the exchange to cover surrender obligations related to future exports or to finance imports. In some cases exporters sold much of the difference to the banks in order to finance local currency cost and/or to generate liquid Guarani capital for application in the local capital market at high rates of interest. The proceeds of the excess export surrender were kept in special local currency accounts which could be withdrawn at any time and converted at the rate of exchange prevailing at the moment of exchange surrender. By year-end 1970, such deposits--so - 64 - called deposits of exchange for future exports (anticipos)--had acctualat9i an outstanding balance of about US$25 million or the equivalent of five mo-nths of commodity exports. In January 1971, the Central Bank introduced new regulations indicating that such deposits may in the future be applied only to exports occurring within the term of one year, may no longer be used to cover imports and are declared non-negotiable. The amount of these deposits outstanding (US$27 million) may be used to cover future exports over the next four years, after which time the balance left will be considered settled at the rate of exchange prevailing at the moment of surrender. Nevertheless and more important, the "aforo"l system by virtue of its arbitrary nature, leads to inequities in the fiscal and foreign exchange obligations imposed on various industries and discourages innovation. During 1970 the export tax on meat products was eliminated. The recently established NIational Council for Export Promotion has recommended complete elimination of taxes on exports and is pressing for simplification of export licensing procedures. In addition to these reforms the Tiaforoll system of export valuation should be modified so as to improve the equity of exchange surrender requirements and facilitate fair income taxation of exporter profits. C. EXPORT FO1RECAST 103. Projections made by IBPD staff indicate that Paraguay's com- modity export earnings can be expected to increase at an average annual rate of 5.7 percent through 1976. Increases in the export of certain primary and processed agricultural products--particularly tobacco, cotton, corn, edible oils, pellets and expellers, essential oils and raw silk-- would account for about 60 percent of the absolute difference in earnings over the period. The projected behavior of these commodities is based not only on production trends (see tables 7.4, 7.8 and 7.10, Statistical 21ppendix), but also on the assumption that needed additional internal oil processing facilities will be installed. As in the case of beef, constral.rAt on the growth of these agricultural exports are on the supply rather than the demand side. 104. Prospective 5.4 percent average annual increases in the value of Paraguay's beef exports would account for another 27 percent of the total absolute increase in Paraguay's commodity export earnings. On the supply side this projection assumes that the herd is built up at an annu3l rate of about 3 percent and that the slaughtering rate improves slightly (from 11.5 percent in 1969 to 12 percent in 1976) such that total slaugiiter increases at an annual average rate of about 4 percent. The exportable surplus, which increased sharply from 22 percent of total slaughter in 1A.?', to 25 percent in 1970, is assumed to remain at the latter level owing to increases in producers' prices paid by the export processors. This would permit internal consumption to remain constant at its present per capita level of about 38 kilos annually. FOB export prices for Paraguay's frozen meat and canned meat are expected to increase at average annual rates of 2.5 and 3.8 percent, in real terms, respectively; the lattJer increase reflecting not only world market conditions but also a shf-ft out of corned and into cubed canned beef on Paraguay's part. - 65 - 105. Paraguay's earnings from the export of various traditional commodities such as coffee, quebracho extract and tung (industrial) oil are expected to decline somewihat over the 1970-76 period because of production decreases and/or lower international prices. In the case of wood products, Paraguay's policy of limiting log exports together with the probable timing of the installation of additional processing facili- ties are such that respective export earmings are likely to decline in the next few years, surpassing present levels only in 1976. Of course, subsequent to 1976, increases in wood product exports could well constitute a very dynamic element in Paraguay's export performance. Even during the 1970-76 period, wood exports could contribute more to such performance if Argentina relaxes further its restrictions on the importation of wood products such as sawn lumber and doors which Paraguay is now capable of processing. Like wood products, electric energy exports should contribute substantially to Paraguay's exports performance in the longer term; instal- lation of the third and fourth Acaray turbines and of interconnection facilities which is about to get underway will permit Paraguay to export electricity to Brazil and Argentina by 1973; subsequent work on the Guaira Falls and Apipe Rapids projects would multiply manyfold Paraguay's energy export capacity and facilitate the installation of new export industries such as cellulose. 106. As compared to the 5.7 percent commodity export earnings growth path, total export earnings (goods and non-factor services) are projected to increase at an 8.2 percent average annual rate over the 1971-76 period. The difference is accounted for by tourism; a detailed IBTRD study of Para- guay's tourist industry shows that gross tourist expenditures in Paraguay can be expected to expand by at least 17 and by as much as 26 percent annually over the medium-term. The conservative end of this range is incorporated in the overall 8.2 percent projection of exchange earnings growth. - 66 - PROJECTION OF GOODS AND NON-FACTOR SERVICES EPORT GROWTH (US$ millions) Average nnual 1969 1970 1976 X 7\ 1970-7b WTood Products 13.3 12.7 14.7 2.5% Logs 77T (6.) () (_ Lumber (5.7) (5.2) (12.0) (15.0) lNanufactured (0.7) (0.8) (2.7) (22.4) Livestock Products 18.1 22.3 29.5 4.8 Beef (1-532) (197.) (TU62) (5-$) Others (2.9) (3-2) (3-3) (0-5) Agricultural Products 26.0 29.0 41.6 6.2 Cement 0.1 0.4 1.0 16.5 Raw Silk - - 3.2 _ Others 1.7 2.6 3.6 5.6 Sub-Total Commodities 59.2 67.0 93.6 5.7 Tourism 13.3 16.o 41.5 17.2 Other Non-Factor Services 5.6 6.4 8.4 4.6 TOTAL 78.1 89.4 143.6 8.2 - 67 - VI. DEVELOPMENT PROSPECTS 107. The proposed 1971-75 Economic and Social Development Program elaborated by Paraguay's Technical Planning Secretariat projects an average annual economic growth path of 6 percent. Opportunities for improving the exploitation of the country's factor endowment support the feasibility of this target. Incremental capital output ratios averaging 3.5 in recent years and the distribution of investment as between infrastructure and commodity production capacity indicate that, incorporating the public sector investment program outlined above (see para. 70), total investment averaging 21.6 percent of GDP annually over the 1971-76 period would be sufficient to sustain a 6 percent growth path over the medium term. At the same time, the import component of these investments, the needs of the manufacturing sector for intermediate goods and of the econamy as a whole for imported fuels and lubricants, and the demand for imported consumer goods-particularly if rapid tourism growth is to be realized--are such that imports can be expected to increase much more rapidly than exports over the 1971-76 period; as compared to the 8.2 percent average annual rate of growth in export earnings projected above, the country's commodity import bill--starting from an abnormally low level in 1970--can be expected to increase at an 11.6 percent pace during 1971-76. This would leave Paraguay with an external resource gap averaging 3.1 percent of GDP over the period. Even at this level, however, the prospective external resource gap together with Paraguay's investment requirements imply a savings effort raising domestic savings from the 14 percent of GDP which they averaged during the six preceding years to 18.4 percent of GDP during the six yearL ending in 1976. This would require the economy to save 27 percent--on average--of annual increments in GDP during 1971-76; on the other hand, it would permit consumption to increase at a 5.4 percent pace in real terms or, by 2 percent annually on a per capita basis. - 68 - AVAILABILITY AN4D USE OF RESOURCES Average Anlual Avera4e Distribution 0 -___ r 19i65 0 1971-76 965- 67X >7 I. Gross Domestic Product 100.0 100.0 4.7 6,0 (a) Net Factor Payments 0.8 1.1 22.6 3,2 (b) Gross National Product 99.2 98.9 4h6 6 II. Resources Gap 3.2 3.1 (a) Imports of Goods and Non- Factor Services 17.2 18.9 8.4 11LO (b) Minus: Exports of Goods and Non-Factor Services 14.0 15,8 3.3 8.2 III. Available Resources (I + II) 103,2 103.1 IV. Consumption 86.0 81.5 5.2 5,4 V. Investment 17.2 21.6 7.3 1:1.6 (a) Private Sector 12.3 15.0 4.5 12.4 (b) Public Sector 4.9 6.6 19.0 VI. Domestic Savings (V - II) 14.0 18l5 1.8 8.9 7II. National Savings (VI - Ia) 13-2 17.4 0.5 9_2 (a) Private 10.6 13.3 -2.5 10.2 (b) Public 2.6 4.1 20.4 6.,3 Source: Table 2.2, Statistical Appendix. 108. Sectoral growth prospects have already been discussed in the respective sections of this report. Briefly, the secondary sectors are expected to play the leading role in the growth process increasing at a 9.2 percent average annual pace as new facilities are installed to process oil crops and forest products, as the excess capacity now prevailing in the livr- stock processing industry is utilized and more value is added to the pr=ai-y material by virtue of its export processing, and as Government investmentf i road construction and housing increases construction activity. The domestitc product of the primary sectors can be expected to increase at a 4,6 percent;, average annual rate. Agriculture will probably be the fastest growing o2 tha primary sectors as new processing facilities and Government promotional pol- icies elicit some increase in per hectare productivity and even greater increases in hectarage planted in cash crops (see Table 7.4, Statistica - 69 - Appendix). Livestock output can be expected to increase at a 4.6 percent pace not only because of the build-up of the cattle herd and improvement in the extraction rate but also because of increasing hog and poultry producticn (see Table 7.8, Statistical Appendix). Forestry production should grow by about 4.4 percent annually, because of increased lumbering by expanded proces- sing industry (see Table 7.10, Statistical Appendix). The service sectors will also be a source of some dynamism in the economy: basic services can be expected to grow at a 5.4 percent pace because of Government investment in electric energy, water and sewage and transport. Other services should increase somewhat more rapidly because of tourism as well as because of Government programs to expand educational facilities. GDP DISTRIBUTION AND GROWTH BY SECTORS % Distribution Average Annual % 1970 1976 1965-70 1971-76 I. Primary 32.2 29.5 2.3 4.6 1. Livestock 9.9 9.4 2.1 5.2 2. Crops 18.0 16.2 2.4 4.1 3. Forestry 4.3 3.9 2.7 4.4 II. Secondary 19.1 22.5 5.8 9.2 1. Manufacturing 16.2 18.1 5.8 8.0 2. Construction 2.9 4.4 9.3 13.7 III. Basic Services 5.0 4.8 X.3 5.4 IV. Other Services 43.6 43.1 6.o 5.8 GDP at Market Prices 100.0 100.0 4.8 60o Source: Table 2.5, Statistical Appendix. 109. The import requirements for this sectoral growth pattern are estimated to be the following: (i) intermediate goods imports averaged about 14 percent of value-added in manufacturing during the "sixties"; since no major import substitution or deviation from the traditional concentration in manufacturing on the processing of locally produced raw materials is antici- pated, this relationship should continue to prevail; (ii) capital goods imports averaged about 23 percent of investment in fixed capital during the 1966-69 period when public investments were at their historical peak amad the National Development Bank was financing the installation of mechanized agriculture; for the 1971-76 period this ratio is projected to increase some- what because of the expected expansion of commodity processing facilities as - 70 - tiell as because of the nature of the public sector investment program, theF requirements of the mechanized agriculture program, etc.; (iii) the demand for fuels and lubricants is expected to have an elasticity of about 1.5 to increases in domestic product over the medium-term; and (iv) imports of finished consumer goods have averaged about 7 percent of total consumption expenditures in Paraguay in the recent past and this relationship is projecte' to continue since no major import substitution is projected in the medium Le:;n. Overall, therefore, commodity imports can be expected to increase at an 11 .` percent average annual rate during 1971-76 from their 1970 low point. Con- paring average commodity import bills over the 1965-70 and 1971-76 periods, however, import requirements are shown to increase at an annual rate o' .? percent or to have an elasticity of about 1.35 with respect to changes in --. PROJECTED IMPORT REQUIRMIENTS (in US$ millions) 1969 1970 1971 1972 1973 1974 1975 15K') Goods 81.2 70.0 83.7 91.2 99.5 lO9e9 121.3 iLY Capital Goods 26.7 19.5 29.5 33.2 37.3 42.5 49.0 <3o Intermediate Goods 12.0 12.0 13.4 14.9 16.6 18.5 20.6 c^ Fuels and Lubricants 4.5 5.0 5.5 6.0 6.6 7.3 8,o .e Consumer Goods 38.0 33.5 35.3 37.1 39,0 41.6 43.7 L?7- TITon-Factor Services 23.8 20.5 23.4 25.3 27.4 30.0 32.8 3 i TOTAL 105.0 90.5 107.1 116.5 126.9 139.9 154.1 ! Source: IBRD staff estimates. 110. The external resource gap emerging from the import requiremerrn.s i achieving a 6 percent growth path and from Paraguay's export prospects w:S;.1' total about US$135 million over the 1971-76 period. An additional US$50 ;o';i lion in net financing would be needed if the country's net liquid external assets are to be built-up to a level commensurate with the annual vol-me of its current exchange transactions. Moving from net to gross capital rcqu-L_- naents, Paraguay can anticipate a net outflow of factor payments totalling another US$50 million over the 1971-76 period in the form of dividend ramr; tances, interest on debt already contracted as of end 1970 and interest un new foreign debt which will have to be contracted to finance needed grcss capital inflows. Finally, amortization payments on debt already contract,J bi Paraguay will amount to approximately US$55 million during 1971-76. Parafii- therefore, is likely to need about US$290 million in gross capital inffl ;2 during the 1971-76 period. Of this amount approximately US$60 million will probably be forthcoming in the form of direct private investment, GovC.u,ide.it, and international agency grants and Special Drawing Rights. The remainiLg US$230 million wi'll have to be obtained from external lendes., - 71 - BALANCE OF PAEMITS, 1971-76 (in US$ millions) 1971 1972 1973 1974 1975 2976 Resource Gap -16.3 -19.5 -21.1 -24.2 -26.6 -27.1 Imports -107.1 -116,5 -126.9 -139.9 -154.1 -170,7 Exports 90.8 97.0 105.8 115.8 127.6 1l.3,6 Net Factor Payments -7.7 -7.7 -7.4 -7.5 -8.1 -3.7 Dividends -2.7 -2.9 -3.2 -3.4 -3.7 -4v2J Interest -5.9 -6.7 -7.4 -8.1 -8.4 *-8.9 Public & Public Guarantee (-3.9) (-4.3) (-4.8) (-5.4) (-5.8) (-6./4) Private (-2.0) (-2.4) (-2.6) (-2.7) (-2.6) (-2.5) Inflows 0.9 1.9 3.2 3.8 3.8 4 2 Current Account Balance -24.0 -27.2 -28.5 -31.7 -34.6 -35,3 Long-Term Loans 29.2 37.6 34.6 24.5 29.9 iu.7 Disbursements 38.7 46.9 43.5 33e5 38.9 27.6 Amortization -9.5 -9.3 -8.9 9.0 -9.0 -8..) Other Capital Flows 10.2 10.7 9.2 9.7 10.2 10r7 ' Donations 2.7 2.7 2.7 2.7 2.7 2'? Direct Investments 5.5 6.0 6.5 7.0 7,5 8i'2 Special Drawing Rights 2.0 2.0 - - - - Net Foreign Reserves -15.4 -21.1 -15.2 -2.6 -5.5 6.!: (-=increase) Source: Table 3.1, Statistical Appendix. 111. Paraguay's requirements for gross external loan capital are Lke' to be met by external financing of, essentially, the foreign exchange conpr\nenr+ of public sector investment projects and of National Development Bank dev',oc. ment credit programs. Disbursements of such financing already in the pipc -sL1 as of end 1970 should amount to approximately US$90 million over the 19'u-7o period. Total external financing to the Government in connection with the new public sector investment starts identified and existing programs (paraq, 71 to 75) would amount to about US$144 million while disbursements from external credits to the BNF and to the Livestock Development fund to cGVevr the foreign exchange component of expanded and new development credit linees (see para, 84) would total about US$74 million. A list of the new public sector investment projects and new and/or expanded BNF credit programs - 72 - requiring external finance showing the amounts of external finance needed, the likely sources thereof and probable disbursement patterns is included iri the Statistical Appendix (Table 3.7). Interest already manifested by the major external lending agencies in these projects and programs is such that, given satisfactory economic performance on the part of the Government, Paraguay's new external credit requirements are likely to be met on terms which will not deteriorate the structure of the country's external debt. In fact, some improvement in debt structure can be anticipated as the BNF reduces its reliance on suppliers' credits to finance its operations. In 1976 the average interest rate on Paraguay's external debt would amount to 3.1 percent as opposed to 3.9 percent in 1970 while amortization payments during that year would amount to about 4 percent of the total as compared to 10 percent in 1970. (The terms prior to 1970 were more favorable than in that year.) Thus, in 1976 the ratio of service on Paraguay's public and publicly guaranteed external debt to its goods and non-factor services export earnings can be expected to amouhit to 9.6 percent as compared to 13.5 percent in 1970. COMMITMENT OF AND DISBURSEMENTS FROM LONG-TERM EXTERNAL CREDITSI/ (in US$ millions) 1970 1971 1972 1973 1974 1975 1976 ANNUAL INEW COMMITMENTS 89.6 49.0 23.5 19.4 23.0 32.3 24.C' End 1970 Pipeline 89.6 - - - - - - New Loans 1971-1976 I - 49.0 23.5 19.4 23.0 32.3 21.0 ANNUAL DISBURSEMENTS BY DESTINATION Public Sector 7.5 22.8 28.9 31.8 23.7 21.2 15.3 Official Intermediaries 7.7 12.4 13.5 9.7 8.8 17.3 1.., Private Sector 0.3 3.5 4.5 2.0 1.0 0.5 - TOTAL DISBURSEMENTS 15.5 38.7 46.9 43.5 33.5 39.0 27,o Pipeline 15.5 28.2 25.6 16.4 10.3 8.1 l.o New LoansJ - 10.5 21.3 27.1 23.2 30.9 26.6 1/ Foreign currencies only. 21 For terms and origin of projected new debt see table 3.7 in Statistical Appendix. ll. Net long and medium-term external borrowing (i.e., disbursements minus amortization of public and publicly guaranteed loans) would finance 44 and 9 percent respectively of Paraguay's public and private sector invest- ments over the 1971-76 period. If interest payments on external public and publicly guaranteed debt are taken into account, these percentages are reduced to 36 and 8 percent, respectively. Despite significant direct private - 73 - investment over the period, net private external resource flows can be ex- pected to be negative. This reflects the improvement in the net liquid external asset position--a build up of foreign exchange reserves is shcin as negative private flows, FIIANCING OF INVESTDMENT (in illThnt of Guarani'es) 1971 1972 1973 1974 1975 1976 I. Public Fixed Investment and its Financi 5 995 6,205 6,340 5 975 5,610 4,505 T7TDomestic Savings T 3Tho 3,3403 t319; 4,172 3, 7T5 (b) External Public Resources/ 1,852 2,574 2,937 1,781 1,438 720 (i)Disbursements of Long and 1Niedium-Term Public Loans 2,873 3,645 4,008 2,980 2,671 1,931 (ii)Minus: Amortization of Public Loans -634 -644 -638 -708 -718 -670 Interest on Public Loans -387 -427 -433 -491 -515 -541 II. Private Fixed Investment and its Financing 8 950 10,995 11,895 14,975 16,705 19,260 (a) Domestic Savings 7 11,109 12, 172 13, 711 14, 793 l16, L (b) External Public Resources 1,439 1,671 828 644 1,633 7y6 (i)Disbursements of Long and Medium-Term Public Loans 2,005 2,262 1,470 1,240 2,339 1,5X4 (ii)inus: Amortization of Public Loans -462 -427 -388 -324 -323 -3849 Interest on Public Loans -104 -164 -254 -272 -283 -3° (c) External Private Resources -1,236 -1,785 -1,105 620 279 1f0Li (i)Direct Foreign Investment 693 756 819 882 945 1,C03 (ii)MIinus Dividend Payments 340 367 394 1428 462 53C (iii)Cther Net Resources2f -1,589 -2,563 -1,530 166 -204 1,396 III. Total Fixed Investment and its Financing 14,945 17 200 18 235 20,950 22,315 23 76- (a) Domestic Savings (Ia + Ila) 12,I90 1L),740 75 17,905 T9 20,3L9 (b) Resource Gap 2)055 2,460 2,660 3,045 3,350 3, 42d (i)External Public Resources (Ib + IIb) 3)291 4,245 3,765 2,425 3,071 1,516 (ii)External Private PResources (Ic) -1,236 -1,785 -1,105 620 279 1,904 Includes only foreign CUXrencies, disbursements and service payments. j/ Includes only foreign currencies, disbursements and service payments, financial intermediaries (Central Bank and IDB) and a loan of the IFC (US$7 million) which is noormally cotisidered private resources since it is' not guaranteed by the Government. S/ Includes transfers, donations, net short-term borrowing and interest thereon and changes in net foreign assets (_ = increase)'. Source: IBRD staff estimates and projections. - 74 - 113. Table 4.10 in the Statistical Appendix deals with the longer range implications of the 6 percent growth model sketched out in the pre- ceding paragraphs. It assumes that economic growth and the pace of export expansion continue at average annual rates of 6 and 8 percent respectively, through 1985 and that the elasticity of import demand to changes in GDP declines somewhat as the 6 percent growth path is sustained. It also assumes that the terms of the external loans needed to supply Paraguay with required gross inflows of external resources follow the same pattern which is likely to obtain during the 1971-76 period. The projection shows Paraguay's debt service ratio increasing from 9.6 percent in 1976 to about 17 percent in 1985, reflecting the past 1976 termination of grace period? on much of Paraguay's existing debt as well as on new debt contracted in the medium term. However, in vieJT of Paraguay's agro and forest industry potential and of the possibility of sharply improving the exploitation of its hydraulic energy resources and establishing related industry, rates of export and GDP growth might well accelerate to say 10 and 7 percent, respectively, in the longer term. This probably would not require a substantial improvement in the marginal propensity to save over that required to achieve 6 percent growth in the medium-term and wJould reduce external capital requirements such that--under the same terms Paraguay's debt service ratio could be expected to amount to approximately 14 percent in 1985. On the other hand, if Paraguay fails to improve its export per- formance and export earnings increase at a 5 percent annual pace subsequent to 1970, even the attainment of a 5 percent economic growth path probably would require larger recourse to external financing than that which would be needed to cover the foreign exchange component of presently contemplated public sector and official intermediary investment programs. Even assuming that such financing could be obtained on the same terms assumed in connect1i0 with the basic 6 percent growth forecast, Paraguay's debt service ratio would amount to 16 percent already in 1976 and could be expected to rise rapidly thereafter. l]L. This sensitivity analysis illustrates the importance to Paraguay'; development of good export performance; an importance which stems both frurY the limited nature of its internal market and from its dependence on exte ,la suppliers of capital, intermediate and finished consumer goods. Even the relatively good export performance consistent with the achievement of 6 p cent growth is not likely to be conducive to rapid alleviation of Parag'lai's unemployment problem. For example, at 6 percent growth Paraguay's overt un- employment rate would be likely to be as large as 5 percent in 1973 even per worker productivity in agriculture and services were not improved (sen Table 1,2, Statistical Appendix). An economic development program designed to reduce underemployment more rapidly is highly desirable but difficult t-o undertake in the near future due to insufficient entrepreneurship at prezen'. 115. In order to achieve the export and other economic performance targets predicated by the 6 percent growth model and to justify the support by the major external lending agencies assumed by the above-mentioned long- term debt projection, the Government should give great priority to the following policies: (a) c.reful selection of' new public sector infrastructural investment starts--taking into account the most urgent infra- structural requirements Lnd the competing resource claim of the commodity producing sectors; (b) reduction of the cost and improvement of the allocation of commercial bank credit such that commodity producing sector credit needs are adequately met; (c) improvement of public administration, especially in the sense of eliminating unnecessary impediments to export expansicn, improving the tax treatment of livestock producers and enacting an appropriate legal framework for the exploitation of forest resources; and (d) rationalization of relative prices; in addition to reducing credit costs the Government should review the pricing of electric energy with a view to maximizing revenue from sales to industrial users. 116. The Government has made considerable progress in recent years in improving its savings capacity, increasing Paraguay's economic and social infrastructure and promoting the development of the commodity producing sectors through the operations of the National Development Bank and other agencies. Thus, the policy requirements identified above largely represerit a continuation of the trend of improving economic performance already established by the Government. STATISTICAL APPENDIX Table Number I. POPULATION 1.1 Estimated and Projected Population 1.2 Estimated and Projected Labor Force Distribution in Selected Years II. NATIONAL ACCOUNVTS 2.1 Availability and Use of Resources, 1962-69 (millions of current Guaranies) 2.2 Availability and Use of Resources, 1962-76 (millions of 1969 Guaranies) 2.3 Availability and Use of Resources, 1962-76 (percent of Gross Domestic Products) 2.4 Gross Domestic Product by Sector of Origin, 1962-70 (millions of 1969 Guaranies) 2.5 Gross Domestic Product by Sector of Origin, 1970-76 (millions of 1969 Guaranies) 2.6 Major Aggregate Indicators, 1962-76 (miLlions of 1969 Guaranies) III. BALANCE OF PAYMEUTS 3.1 Balance of Payments, 1964-76 3.2 Commodity Exports, 1960-69 3.3 Commodity Exports, 1968-76 3.4 Commodity Imports, 1962-69 3.5 Structure of Imports in Relation to National Income Aggregates, 1962-76 3.6 International Reserves, 1961-69 3.7 Possible Commitments and Disbursements of External Loans, 1971-76 3.8 External Resource Balance and its Financing, 1964-76 Table Number IV. EXTERNAL DEBT 4.1 External Public Debt Outstanding as of December 31, 1969 4.2 Estimated Future Service Payments on External Public Debt Outstanding Including Undisbursed as of Dec 31, 1969 4.3 External Public Debt Outstanding by Sector as of December 31, 1969 4-4 Estimated Service Payments on External Public Debt as of December 1969 by Sector 4e5 Reported Additions to External Puolic Debt Contracted January 1 - Dec. 31, 1970 4.6 Estimated Service Payments on Reported Additions, January 1 - Dec0 31, 1970 4.7 Reported Additions to External Public Debt by Sector, Jan. 1 - Dec. 31, 1970 4.8 Estimated Service Payments on Reported Additions by Sector, Jan. - Deco 1970 4.9 Past Transactions on External Public Debt, 1965-69 4h10 Long-Term Debt Projections, 1964-85 VO PUBLIC SECTCP INVESTMENT AN%D ITS FINANCING Central Government Historical and Projected Revenue Performance, 1964-76 5c2 Public Sector Investment Program, 1971-76 5.3 Consolidated Public Sector Expenditures and their Financing, 1964-76 5.4 Public Sector Investments by Sectors, 1964-69 5.5 Public Sector Inves-tments by Sectors, 1970-76 5e6 Public Fixed Investments by Sectors, 1964-76 5.7 Road User Charges and Expenditures on Highways VI, MOEITARY 6.1 Summary Accounts of the Central Bank, 1964-70 6.2 Summary Accounts of the National Development Bank, 1964-70 6.3 Summary Accounts, Commercial Banks, 1964-70 6c4 Consolidated Accounts of the Banking System, 1964-70 6c5 Changes in Outstanding Bank Credit by Origin, Destination and Financing, 1965-70 Table Number VIIo AGRICULTURE 7.1 Distribution of Land by Actual and Potential Use, Value-Added and Employment 7.2 Land Tenancy 703 Inputs and Productivity in Agriculture 7.4 Agriculture: Gross Output Volume and Value and Producers Price Indexes for Crop Production in Selected Years 7.5 Profitability of Crop Production on Small Farms, 1968-69 Agriculture Year 7.6 Hectarage, Yield and Price of Principal Cash Crops 7.7 Five Hundred Hectare "Entrepreneurial Agriculture" Project; Return on Invested Capital Values 7.8 Livestock: Gross Output Volume, Value and Producers Price Indexes for Livestock Production in Selected Years 7.9 Return on Operations of a 4,000 ha. Cattle Ranch 7.10 Forestry: Gross Output Volume and Value and Producers' Price Indexes for Principal Forestry Products in Selected Years VIII. OTBER SECTORAL STATISTICS 8.1 Gross Domestic Product in Manufacturing, 1962-69, Composition & Trends 8.2 Labor Utilization in Manufacturing 8.3 Trends in Physical Output and Value-Added in Manufacturirng Industry 8.4 Capital Output Relationships and Cost of Job Formation in Mvlanufacturing Industry 8.5 Profitability of Soybean Oil Production, 1969-70 8.6 Number of Tourism Arrivals and Gross Earnings from Tourism, 1964-70 IX. PRICES 9.1 Cost of Living Index for Asuncion, 1960-70 9.2 Implicit Deflator, National Accounts, 1950-70 Table 1.1: ESTIMATED AND PROJECTED POPULATION Crude Birth Crude Death Rate of Pop'n Total Infant Mortality Rate Rate Growth Population (Deaths to Children Under 1 Year (Per '000 Population) (% per Year) (in '000s) -per '000 live births) 1960 ) 1,751.2 ) 41.6 12.1 3.0 98.0 1965 ) 2,030.0 1966 ) 2,094.1 1967 ) 42.2 10.6 3.2 2,161.2 84.3 1968 ) 2,230.9 1969 ) 2,303.5 1970 ) 2,379.0 1971 ) 1972) 1973 ) 42.8 9.3 3.4 1974 ) 1975 ) 2,811.9 ) 3.4 1980 ) 3,323.5 ) 3.4 1990 ) 4,643.0 ) 3.4 2000 ) 6,486.4 Source: Roger Mellion and Arnaldo Silvero: "Proyeccion de la Poblacion del Paraguay (1960-78)"; Poblacion, Urbanizacion y Recursos Humanos en el Paraguay, Centro Paraguayo de Estudios Sociologicos, Asuncion, 1970; and IBRD staff estimates for years subsequent to 1970. Table 1.2: ESTIMATED AND PRCJECTED LABOR FORCE DISTRIBUTION IN SELECTED YEARS ('CUO of Workers) 1950 1962 1965 19733/ 19763/ Number 1 Number % Number % Number % Number % I. Labor Force Distributioni Total Labor Force 437.3 100.0 586.8 100.0 64914 100.0 10..94157 100.0 Total Employment 425.1 97.2 457.1 94..9 608.4 94.6 808.1 95.1 897.4 95.3 Primary Sectors 235.4 53.8 215.3 53.7 349.6 54.4 429.1 50.5 468.9 59.8 Manufacturing 68.6 15.7 84.7 14.4 59.9 14.0 117.5 13.8 132.2 15.0 Construction 12.8 2.9 14.5 2.5 15.3 2.5 25.1 3.0 30.7 3.3 Basic Services 10.2 2.3 15.1 2.4 16.0 2.5 20.4 2.4 22.6 2.4 Other Services 95.1 22.4 128.6 21.9 137.6 21.5 216.0 26.4 253.0 25.6 Unemployment 12.2 2.8 29.7 5.1 35.8 5.4 41.3 b.9 54.3 5.7 II. Average Annual a A in value-added since previous year cited-/ Paraguay 3.1 4.3 4.9 6.3 Primary Sectors 2.4 4.1 2.6 4.8 Manufacturing 2.4 3.6 6.4 5.0 Construction 5.8 10.1 10.4 13.3 Basic Services 2.5 5.2 5.1 5.7 Other Services 4.3 4-3 5.- 6.2 III. Average Animal % A in per worker productivity since previous year cited Paraguay 0.o 1.3 1.3 2.7 Primary Sectors -0.1 1.5 - 1.6 Manufacturing 0.6 1.6 3.0 4.0 Construction 4.8 8.1 4.0 6.3 Basic Services -0.1 0.9 2.0 2.2 Other Services 2.0 2.0 - 2.2 IV. Average Annual % A in workers employed sir.ce previous year cited Paraguay 2.3 3.0 3.6 3.6 Primary Sectors 2.5 2.6 2.6 3.0 Manufacturing 1.8 2.0 3.4 4.0 Construction 1.0 2.0 6.5 7.0 Basic Services 2.7 4.3 3.1 3.5 Other Services 2.3 2.3 5.8 4.0 V. Average Annual % A in labor forcel/ 2.5 3.1 3.5 3.5 1/ Estimated labor force distribution in 1950, 1962 and 1965 and future labor force growth taken from Esteban Aderman and - Arnaldo Silvero, "La Planificacion de los Recursos Humanos en el Paraguay" Poblacion, Urbanizacion y Recursos Humanos en el Paraguay", Centro Paraguayo de Estudios Sociologicos, Asuncion, 1970. 2/ Historical changes in value-added by-sector taken from national accounts data, Central Bank of Paraguay. 3/ Future changes in value-added ar-A labor force distribution estimated by IBRD staff. Note that the assumption of no increase in per worker productivity in the primary and "other service" sectors between 1965 and 1973 merely serves to illustrate the maximum effect in terms of reducing overt unemployment at the projected rate of econosic growth. Only after growth at the projected rate had been sustained for sometime would under-employment in the primary and service sectors be appreciably reduced. Table 2.1: AVAILABILITY AND USE OF REM0RCE, 1962-69 (, millions - (Turrent) 1962 1963 1964 1965 1966 1967 1968 1969 I. Gross Domestic Product 45,394 48,280 51,334 55,812 58,574 62,027 65,220 69,9041 a. Net Factor Payments -138 -171 -218 -320 -406 -467 -432 -653 b. Gross National Product 45,256 48,109 51,116 55,492 58,168 61,560 64,788 69,251 11. Resources a1,860 632 432 5°4 216 3,626 3,386 a. Imports of Goods and Non-Factor Services 7,177 6,932 8,151 9,496 9,923 10,436 11,860 13,231 b. Minus Exports of Goods and Non-Factor Services -5,317 -6,300 -7,719 -8,992 -7,777 -7,857 -8,234 -9,845 III. Available Resources (I+II) 47,254 48,912 51,766 56,316 60,720 64,66 68,846 73,290 IV. Consumption 40,189 414J19 43,638 48,125 5o,81 53,490 56,513 60,786 a. Private Sector 36,429 36,787 38,673 42,697 44,948 46,860 49,118 52,938 b. Public Sector 3,760 4,632 4,965 5,428 5,913 6,630 7,395 7,848 V. Investment 7,065 7,493 8428 ¾191 9,859 ii,116 12,333 12,504 a. Private Sector 5,880 6,259 6,869 6,686 7,208 6,79o 8,056 9,255 b. Public Sector 1,185 1,234 1,259 1,505 2,651 4,326 4,277 3,249 VI. Domestic_Savings 5,205 6861 7,696 7,687 7,713 8,537 8,707 9118 VII. NatonalaAns 5267 6J6 7,478 7,367 7,307 8,070 8,275 8,465 a. Private Sector n.a. n.a. 6,74o 6,183 5,940 6,264 6,176 6,447 b. Public Sector n.a. n.a. 738 1,184 1,367 1,806 2,099 2,018 Source: Planning Secretariat, Central Bank and mission estimates. Table 2.2: AVAILABILITY AND USE OF REEGURC3S, 1962-76 (in millions of 196S O(,aranies) Actual F.stimated Projections 1962 1963 1966, 1965 1966 1967 19)68 1569 1970 1971 1972 1973 1976 1975 1976 I. Gross Domestic Product 52,913 53,706 55,532 59,363 60,529 66,270 67,182 69,90L6 73,633 77,680 81,550 86,865 92,075 98,060 106,539 a. Net Factor Pyments -161 -190 -236 -360 -620 -686 -695 -653 -90() - -970 -535 -945 -1,015 -1,090 b. Gross National Products 52,752 53,516 55,296 55,003 60,10G 63,786 66,737 69,251 72,733 76,710 80,980 85,930 91,130 97,045 103,365 II. Resource GAP 2,168 703 667 536 2,218 2,672 3,735 3,386 136 2,055 2,6L60 2,660 3,065 3,350 3,620 a. Imports of Goods and Non-Factor Services 8,366 7,711 8,817 10,097 10,259 10,B13 12,217 13,231 11,6,03 13,695 1,0,685 15,995 17,630 19,620 21,505 b. Minus: Exports of Goods and Non-Factor Services -6,198 -7,008 -8,350 -9,561 -8,036 -8,141 -8,482 -9,865 -11,269 -11,660 -12,225 -13,335 -10,585 -16,070 -18,085 III. Available Resources (I * II) 55,081 5h,hi7 55,959 59,879 62,76i7 66,962 70,917 73,290 73,767 79,735 86,610 89,525 95,120 101,610 107,85 IV. Consumption 16,846 46,G72 1:7,207 51,170 52,559 55,h24 58,213 60,786 61,1l,9 66,790 67,210 71,290 76,170 79,095 8L,090 a. Private Sector 62,663 60,920 b1,836 85,358 .6,6i68 118,555 90,595 52,938 52,796 55,590 57,230 60,530 62,605 66,700 70,805 b. Public Sector 6,383 5,152 5,371 5,772 6,110 6,869 7,618 7,868 8,695 9,200 9,980 10,760 11,565 12,395 13,285 V. Investment 8,235 8,335 8,753 8,709 10,188 11,518 12,70l 12,506 12,318 16,595 17,200 18,235 20,950 22,315 23,765 a. Private Sector 6,856 6,962 7,631 7,109 7,449 7,606 8,298 9,259 9,56h 8,95o 10,995 11,855 16,975 16,705 19,260 b. Public Sector 1,381 1,373 1,362 1,600 2,739 6,516 6,606 3,250 2,756 5,995 6,205 6,360 5,575 5,610 6,505 VI. GDomestic Savings 6,067 7,632 8,325 8,173 7,970 8,816 8,969 9,118 12,186 12,890 16,740 15,575 17,905 18,965 20,365 a. Less Net Factor Payments -161 -190 -236 -310 -620 -686 -665 -653 -900 -970 -970 -935 -9h5 -1,015 -1,090 VII. National Savings 5,906 7,6L2 8,089 7,833 7,551 8,362 8,526 8,665 11,281: 11,920 13,770 16,660 16,560 17,950 19,255 a. Private Sector n.a. n.a. 7,291 6,609 6,138 6,)690 6,362 6,647 8,16,6 8,830 10,300 11,165 13,295 13,920 15,160 b. Public Sector n.a. n.a. 798 1,226 1,413 1,872 2,162 2,018 2,838 3,090 3,630 3,695 3,655 6,030 6,115 Source: Planning Secretariat, Central Bank and mission estimates and projections. Table 2.3: AVAILABILITY AND USE OF RESOURCES, 1962-76 (nperent of Gross Ibmestin Product) Actual Estimated Projections 1962 1963 1961 1965 1966 1967 1968 1969 1970 1971 1S72 1973 1974 1975 1576 I. Gross Domestic Product 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 a. Net Factor Payments 0.3 0.h o.4 o.6 0.7 o.8 0.7 0.9 1.2 1.2 1.2 1.1 1.0 1.0 1.0 b. Gross National Product 95.7 99.6 99.6 99.4 99.3 99.2 99.3 99.1 98.8 58.8 98.8 99.9 99.0 99.0 59.0 II. Resource Gap 4.1 1.3 o.8 0.9 3.7 4.2 5.6 4.8 0.2 2.6 3.0 3.1 3.3 3.1 3.3 a. Imports of Goods and Non- Factor Services 15.8 14.4 15.9 17.0 16.9 16.8 18.2 18.9 15.5 17.4 17.5 18.4 19.1 15.8 20.6 b. Minus: Exports of Goods and Non-Factor Services 11.7 13.0 15.0 16.1 13.3 12.7 12.6 11.1 15.3 114.7 11.9 15.1 15.8 16.4 17.3 III. Available Resources (I + II) 101.1 101.3 100.8 100.9 103.7 104.2 105.6 104.8 100.2 102.6 103.0 103.1 103.3 10'.4 103.3 IV. Consumption 88.5 85.8 85.0 86.2 86.8 86.2 86.6 87.0 83.5 83.4 82.0 82.1 80.6 80.7 80.5 a. Private Sector 80.3 76.2 75.3 76.5 76.7 75.5 75.3 75.7 71.6 71.6 69.8 69.7 68.0 68.o 67.8 b. Public Sector 8.2 9.6 9.7 9.7 10.1 10.7 11.3 11.3 11.8 11.8 12.2 12.4 12.6 12.7 12.7 V. Investment 15.6 15.5 15.8 14.7 16.8 17.9 18.9 17.9 16.7 19.2 21.0 21.0 22.8 22.8 22.8 a. Private Sector 13.0 13.0 13.4 12.0 12.3 10.9 12.4 13.2 13.0 11.5 13.1 13.7 16.3 17.0 18.1 b. Public Sector 2.6 2.5 2.1 2.7 1.5 7.0 6.5 1.7 3.7 7.7 7.6 7.3 6.5 5.8 4.4 VI. Domestic Savings 11.5 11.2 15.0 13.8 13.2 13.8 13.1 13.0 16.5 16.6 18.0 17.9 19.4 19.3 15.5 VII. National Savings 11.2 13.8 14.6 13.2 12.5 13.0 12.7 12.1 15.3 15.3 16.8 16.8 18.4 18.3 18.1 a. Private n.a. n.a. 13.2 11.1 10.2 10.1 9.5 9.2 11.4 11.3 12.6 12.8 11.4 11.2 14.5 b. Public n.a. n.a. 1.4 2.1 2.3 2.9 3.2 2.9 3.9 4.0 4.2 1.0 1.0 4.1 3.9 Source: Planning Secretariat, Central Bank and mission estimates and projections. ,able 2.4: DOMSTIC PRODUCT BY SECTOR OF ORIGIN, 1962-70 (million 1969 Gaaranies) Average Annual % Distribution % Distribution % A 1962 1962 1963 1964 1965 1966 1967 1968 1969 1970 1970 Primary 37.0 19,362 20,1d7 20,633 21,805 21,003 21,741 22,149 22,731 23,705 32.2 2.6 Agriculture 20.1 10,521 11,559 11,530 12,003 11,323 12,131 12,373 12,646 13,264 16.0 2.9 Livestock 12.0 6,260 6,059 6,419 6,761 6,650 6,820 6,919 7,036 7,287 9.9 1.9 Forestry 4.7 2,484 2,441 2,517 2,o35 2,745 2,539 2,666 2,662 2,951 4.0 1.4 Hunting and Fishing 0.1 44 41 55 73 75 85 106 116 126 0.2 14.3 Mining 0.1 53 87 112 113 210 166 63 69 75 0.1 4.4 Secondary 17.9 9,341 9,364 10,066 10,629 11,155 12,131 12,564 13,312 14,1o4 19.1 5.3 Industry 15.8 8,269 8,210 8,798 9,197 9,447 10,211 10,809 11,274 11,943 16.2 4.7 Construction 2.1 1,072 1,154 1,266 1,432 1,708 1,920 1,755 1,938 2,161 2.9 6.1 Services 45.1 23,574 23,697 24,600 26,623 27,665 30,156 32,395 33,861 35,824 48.7 5.4 &iectricity o.6 292 311 311 321 335 405 407 510 612 0.8 9.7 Water and Sanitation 0.1 61 65 84 72 74 89 97 112 130 0.2 9.9 Transport and Communications 4.1 2,126 2,162 2,429 2,490 2,535 2,707 2,789 2,926 2,946 4.0 4.2 Commerce 23.5 12,302 11,965 12,304 13,603 11,011 15,357 16,429 17,201 18,044 21.5 4.9 Government 3.6 1,869 2,119 2,195 2,300 2,529 2,729 3,198 3,451 3,61h 5.2 9.3 Housing 3.4 1,796 1,848 1,904 1,960 2,019 2,080 2,113 2,211 2,280 3.1 3.0 Other 9.8 5,128 5,227 5,573 6,077 6,362 6,789 7,332 7,447 7,998 10.9 5.7 Gross Domestic Product at Market Prices 100.0 52,277 53,246 55,499 59,257 60,023 64,026 67,108 69,904 73,633 100.0 4-4 Source: Central Bank of Paraguay. Table 2.5: GROSS DOMESTIC PROaJCT BY S13TOR OF ORIGIN, 1970-76 (in millions of 1969 Guaranies) Average Annual Rate and Growth Percent Distribution _____________________ 1970 1971 1972 1973 1974 1975 1976 1970-64 1976-70 1970 1976 I. Primary 23,705 24,808 25,743 26,779 28,187 29,412 30,824 2.3 4.6 32.2 29.5 1. Livestock 7,287 7,560 7,875 8,255 8,710 9,260 9,860 2.1 5.2 9.9 9.4 2. Crops 13,264 13,955 14,430 14,935 15,130 16,240 16,680 2.4 4.1 ld.0 16.2 3. Forestry, Hunting, Fishing and Mining 3,154 3,293 3,438 3,5d9 3,747 3,912 4,084 2.7 4.4 4.3 3.9 II. Secondary 14,104 15,225 16,650 18,205 19,615 21,620 23,550 5.6 9.2 19.1 22.5 1. Manufacturing 11,943 12,900 13,930 15,045 16,250 17,550 18,955 5.8 8.0 16.2 18.1 2. Construction 2,161 2,325 2,720 3,160 3,365 4,070 4,595 9.3 13.7 2.9 4.4 III. Basic Services 3,688 3,870 4.070 4,290 4,530 4,790 5,065 4.3 5.4 5.0 4.8 IV. Other Services 32,136 33,777 35,487 37,591 39,743 42,236 44,996 6.0 5.8 43.6 43.1 GDP and Market Prices 73,633 77,680 81,950 86,865 92,075 98,060 104,435 4.8 6.o 100.0 100.0 Source: Planning Secretariat, Central Bank and mission estimates and projections. Table 2.6: PARAGUAY: MAJOR AGGREGATE INDICATORS, 1962-76 (in millions of 196' Guaranies) GDP Gross Fixed Fixed Investment Lagged Exports of Imports of Resource Domestic Savings Marginal GDP Increment Investment Coefficient IGOR Goods and NF Goods and NFS Gap Savings Coefficient Savings Rate 1962 52,913 3,336 6,235 15.6 6,19d 6,366 2,16d 6,067 11.5 1963 53,704 791 8,335 15.5 10.4 7,006 7,711 703 7,632 14.2 1.9785 1964 55,532 1,826 8,793 15.8 4.6 6,350 d,617 467 6,325 15.0 0.3791 1965 59,343 3,811 6,709 14.7 2.3 9,561 10,097 536 8,173 13.8 -0.39a8 1966 60,529 916 10,188 16.8 9.5 8,036 10,254 2,218 7,970 13.2 -0.2216 1967 64,270 3,741 11,518 17.9 2.7 8,1141 10,813 2,672 8,846 13.8 0.2342 1968 67,182 2,912 12,7014 18.9 4.0 8,482 12,217 3,735 8,969 13.4 0.0422 1969 (Pre) 69,904 2,722 12,504 17.9 4.7 9,845 13,231 3,396 9,118 13.0 0.0547 1970 (Est.) 73,633 3,729 12,318 16.7 3.4 11,269 11,403 134 12,184 16.5 0.8222 Projections 1971 77,680 4,047 14,945 19.2 3.0 11,440 13,495 2,055 12,890 16.6 0.1745 1972 81,950 4,270 17,200 21.0 3.5 12,225 14,685 2,460 16,740 18.0 0.4332 1973 86,865 4,915 18,235 21.0 3.5 13,335 15,995 2,660 15,575 17.9 0.1699 1974 92,075 5,210 20,950 22.8 3.5 14,585 17,630 3,045 17,905 19.0 O."472 1975 98,060 5,985 22,315 22.8 3.5 16,070 19,420 3,350 18,965 19.3 0.1771 1976 104,435 6,375 23,765 22.8 3.5 1,085 21,505 3,420 20,345 19.5 0.2165 Average Annual Percent Change 1962-1970 4.1 - 6.2 - - 6.8 6.8 - 6.o - - 1969-1970 5.3 _ -1.5 _ _ 14.5 -13.8 - 33.6 - _ 1970-1976 6.o - 11.6 - - 6.2 11.1 - 8.9 - - Source: Central Bank, Plarning Secretariat and mission estimates and projections. I/. Table 3.1: BALANCE OF PAYH,34TS- , 180L.-75 (in thousands of u3 dol-la,-) (Pre) Estimated Projected 1964 1965 1966 1967 1966 1969 1970 1971 1972 1973 1974 1975 1976 Fxports of Goods and Non-Factor Services 61,264 71,367 61,720 62,354 65,341 78,133 d9,440 90,795 97,045 105,325 115,755 127,560 1343,555 Merchandise (FOB)_/ 54,74d 62,993 54,323 53,067 52,298 59,209 67,040 66,050 66,765 73,600 78,630 64,600 93,600 Tourism 2,611 3,010 3,579 4,936 8,071 13,291 16,000 16,doo 22,090 25,600 30,060 35,345 41,530 Non-Factor Services 4,175 5,364 3,616 4,331 4,972 5,633 6,400 5,945 6,190 6,625 7,045 7,615 8,425 Imports of Goods and Non-Factor Services -64 ,694 -75,369 -78,757 -82,624 -94,125 -105,006 90,500 -107,105 -116,530 -126,9945 -139,925 -154,135 -170,665 Merchandise (FOB);1 -49,997 -56,732 -63,273 -65,705 -73,496 -61,203 70,000 -63,700 -91,200 -99,500 -109,900 -121,300 -134,600 Tourism -2,036 -3,1413 -3,760 -4,1475 -4,621 -1,912 5,500 -5,630 -6,180 -6,550 -6,9945 -7,360 -7, 800 Non-Fac- r Services -12,569 -15,496 -11,724 -12,641 -15,606 -16,693 -15,000 -17,575 -19,150 -20,895 -23,080 -25,475 -28,265 Resources Balance (Minus=Inflow) -3,1430 -1,002 -17,037 -20,o047 -28,7614 -26,875 -1,060 -16,310 -19,1485 -21,120 -224,170 -26,575 -27,110 Factor Paynts -1,914 -2,656 -3,500 -1,356 -13,055 -5,701 -7,665 -8,235 -8,210 -7,935 -8,025 -8,590 -9,170 Dlr ds -730 -1,168 -1,992 -2,616 -1,171 -1,481 -2,500 -2,700 -2,915 -3,150 -3,4Go -3,670 -3,965 Interest -1,184 -1,468 -1,508 -1,740 -2,684 -4,223 -5,165 -5,535 -5,285 -4,785 -4,625 -4,920 -5,205 Credits 10 192 306 1390 517 3135 350 360 1,395 2,660 3,1325 3,1313 3,715 Debts -1,1194 -1,660 -1,8114 -2,230 -3,1401 -41,568 5,515 -5,695 -6,6890 -7 4645 -8,050 -8,36o -8,920 Public and Public Guarantee -861 -976 -992 -1,226 -1,554 -2,013 -3,515 -3,695 -4,335 -4,760 -5,385 -5,760 -6,390 Private -333 -684 -822 -1,004 -1,847 -2,555 -2,000 -2,000 -2,345 -2,665 -2,665 -2,600 -2,530 Transfer Payments (Net) 183 120 277 649 524 518 520 520 520 520 520 520 520 Current Account Balance -5,161 -6,533 -20,260 -23,654 -32,315 -32,061 -8,205 -24,025 -27,165 -26,535 -31,675 -34,645 -35,760 Private Donations (Net) 721 976 1,557 2,037 2,395 2,581 2,600 2,600 2,600 2,600 2,600 2,600 2,600 Official Donations (Net) 2,624 2,509 250 100 43 96 100 100 100 100 100 100 100 Direct Investments (Net) 4,348 4,178 2,935 3,558 2,506 5,592 5,000 5,500 6,ooo 6,500 7,000 7,500 8,000 Long and Mledium Term Loans 5,832 9,091 17,727 24,048 28,112 29,736 15,525 36,715 46,860 43,460 33,495 36,970 27,575 Public and Public Guarantee4/ 4,543 8,610 17,727 23,662 26,012 27,996 15,225 35,215 43,360 43,16O 33,495 38,970 27,575 Private 1,2d9 4361 - 366 100 1,740 300 3,500 3,500 - - - - Amortizations -3,0141 -6,700 -4,700 -4,200 -5,600 -5,290 -9,1465 -9,1475 -9,275 -8,920 -8,965 -9,0040 -8,895 Public and Public Guarantee -3,014 -3,450 -2,502 -3,273 -1,l61 -4,760 -8,575 -8,700 -6,500 -8,145 -7,490 7,565 -7,390 Private - -3,250 -2,198 -927 -919 -510 -690 -775 -775 -775 -1,475 -1,475 -1,505 Short Term and Other Capital 3,737 -914 236 -975 -1,791 3,516 3,000 - - - - - - Capital Account Balance 11,251 9,110 18,005 24,568 25,465 36,233 16,760 37,440 46,305 43,760 34,230 40,130 29,380 Errors and Omissions -1,650 459 -738 -5,145 3,595 -7,294 -5,555 - - - - - - Net Change in Foreign Exchange Reserves 4,430 3,031 -2,961 -4,231 -3,255 -3,122 3,000 13,415 19,140 15,225 2,555 5,485 -6,380 minus=decline Special Drawing Rights - - - - - - 2,500 2,000 2,000 - - - - Total Net Change in Foreign Exchange Reserves 4,430 3,031 -2,961 -4,231 -3,255 -3,122 5,500 15,415 21,110 15,225 2,555 5,485 -6,380 (mirus=decline) 1/ Adjusted balance of payments. It differs from the Paraguayan authorities balance of payments. Adjustments have been sade to exclude transaction in local. currencies with the AID and the IDB. Includes only transactions in foreign currencies. 2/ Estimated FOB value. It does not equal aforo (declared) value. 3/ Includes estimates for unrecorded imports. 4/ Includes foreign currency disbursements from IDB repayable in Guaranies. Source: Central Barnk and mission estimates and projections. Table 3.2: COMM(ODITY EXPORTS - 1 /6-61 (Value: - ~006 of US$ (FOB); Volume: Tons) 1960 1961 1962 1963 1961 1965 1966 1967 1968 1969 1. Woods (1.2.3) Value 5,032 6,305 6,171 4,552 6,988 9,566 10,679 7,630 7,882 i1,655 Volume 161,128 198,763 196,975 119.237 711,972 273,331 280,911 201,219 181,290 197,1,35 US$/Ton 31 32 33 31 33 35 38 27 1,3 59 1. Lumber V.-l Ue 1,001. 1,905 1,818 1,015 1,717 2,321: 2,101 1d,.33 2,167 ,71 0 Volume 18,883 31,065 29,706 19,723 26,901 33,173 28,291 20,1.71 31,168 56,862 US$/Ton 53.0 55.9 61.2 51.5 63.8 70.0 71.3 70.0 59.5 82.8 2. Loge Value 1,031 1,100 1,653 3,537 5,265 7,111 8,117 6,099 5,135 6,21,8 Volume 115,215 161,698 167,269 129,51Th 185,011 239,929 252,189 180,367 118,813 137,371 U15$/To. 27.7 26.8 27.3 27.3 28.1 29.8 33.5 33.8 36.5 15.5 3. Manufactured Value - - - - 6 81 131 98 280 697 Volume ..--- 60 232 1,31 381 1,279 3,202 US$/Ton - - - - 100.0 31,9.1 301.8 257.2 218.9 217.7 II. Livestock Products (1.2.3.?, -Value 9.883 11.195 9.766 128, 711 2,0 785 20,971 j 11,97 1. Beef (a.bacud) Val-ue 7,285 8,751 7,631 10,682 15,062 19,025 LI 233 17,570 13,785 12,2110 volume, 19,219 22,835 18,502 25,172 26,617 31,676 22,686 28,658 19,281 20,1.81 US$/Ton 378.5 383.2 112.6 119.1 565.2 600.6 627.1. 613.1 7121 .9 612.5 a. Canned Meat Value 5,613 7,361. 6,163 8,687 9,753 11,125 9,189 13,07, 10,973 9,1,78 Voluc,e 11,1119 16,196 13,511 16,858 15,566 11,61d1: 15,153 21,91, 15,211 ii,, 167 US$/To. 191.2 b51.7 155.1 515.3 626.5 612 .8 606.1, 613.9 721.2 651.7 (i) Corned Beef Value 5,525 7,236 6,06,2 8,562 9,636 11,125 9,189 1-3,1,51: 10,000 8,723 Voume 11,260 16,018 13,372 16,701 15,131 18,61,1, 15,153 21,921 15,113 13,639 US$/Ton 1,90.7 1.51.7 151.8 512.7 621.?, 612.8 601,.1 613.7 721.2 639.6 (ii) Other Canned Value 118 128 121 125 117 - -20 73 705 Voluee 159 178 169 157 135 --26 101 828 US$/Ton 712.1 719.1 716.0 796.2 866.7 - - 769,2 722.6 851.1 b. Frooe Meal Value. - - - 838 3,017 570 77 12 781 Volume -- - 1,902 1,795 977 166 22 1,795 US$/Toe hbo-- 1.6 629.3 583.1 1.63.8 51,i5. ?, J136.5 c.Meat Flxtract ra-lue - ~~~~~1,099 870 912 1,198 3,1b57 3,11 3,577 2,91,6 2,226 1,211 Vnlumne 513 120 :1,1 511 517 509 526 650 505 2836 US$/Toe 2,11,2.3 2,071.1 2,072.6 2,202.2 6,686.6 6,758.3 6,80o.?, ., 378. 5 1,399.2 1~,339.2 d. Beef By-Products Value 543 517 557 797 1,011 1,113 897 1,173 571, 787 Volume 7,317 6,219 6,520 8,070 8,662 7,728 6,030 5,895 3,539 3,933 lS$/Ton 71.2 83.1 123.2 98.8 117.1 10,.9 118.7 199.0 162.2 200.1 2. Hero. Meot Value - - 15 6 352 15 V, 0?, 992 1,101 1,139 Volume -- 301 50 1,982 795 1,192 3,61,9 5,822 3,776 US$/Ton- 118.0 120.0 177.6 196.2 270.8 271.8 210o.6 301.6 3. Hides and Skins Value 2,201 2,052 1,69o 1,518 1,307 1,362 2,595 1,1,5 2 1,081 1,211 Volume 8,957 8,519 7,329 7,572 7,560 8,162 8,292 7,838 7,722 7,088 US$/Ton 216.1 210.9 230.6 200.5 172.9 166.9 312.9 185.2 110.0 170.8 1. Other Meat Produ-ts Value 391 392 397 638 700 865 613 9157 301 377 Voluome 5,910 3,411 3,005 6,103 5,061 5,013 3,819 1,769 1,977 2,011 U30$/Too 66.3 111.8 132.1 101.5 138.3 172.6 160.5 200.7 153.8 184.7 r} LtVo r CC C?' - - w 'CC , C C - z ,, 'C CC S C CII 7A eA er" t- r " r C C" C o ru ,, o ~~~~O' ""A . CCC CCC . CC . " C C_ ,0K_nc_, , "C , CC~ , C C &,,C I o H C"A4 ,-C- C"C"C C"CC rCC mCC R' C _C CC r 4C N", 1-CC C.j CCC r-Cr 'CC CC -U CO- o" CC CC" CCC ,.C w5 C rrs~~~~~~ CC CC M~Du -r : gm 0 X r Gr or -- . C r~~~C C A CM CC -N C"< .HYr 12mruG r X--C a "" .." C C CC) .. C"C OC uo CCC" n " CCC CC! 4CC CmCC CCC r-C '7 C"CN4 DGr CA, CC rn- C" a "o.,-I C" C"nr a qu ~~~~C . CCC 'C 'C C CC C rC&C r+ ' C"d- IN I CC C CC0 C C G; r,- C- oCN C" C C!O CC CCC CC,- C .A"" CS C a Ce- CC.. CC-C.,, n C rA C a C-C CCC rC CCC NCC -CC o.] rr k_on7r _ -C; CA Ct C" \fl CE C C C C" Cx Co 8CJ4NU r D 1 D _ G40 r yr \,s a ,l CC" 1CC CCCC NC CA O C; COC 'hC CC CCC CCC r1 CCC C C C C < rr C _"C CC C CC" CC o "C C-CC C t A- C"" r -"- o "" C" W CL j r 1 hC CAC e.CC 0> _"C CC1W N"Clo! r Mr n 4 CI °0- o1C" CC CCC It C _~C C- uC r- 1C C"; CtCC CCC COO CCI 9 SO i. CAC C?... CCC CCC CC CCC CC9C o S 8Y.= i C ' C e ' % - e- r - C fl9tW S> 9B= 780 IC tC CCCtCae7e>t - 9or> l zt >>9gt C C" C"C" t C. o H -,r Y 4 1ggBoa l°0aXe C ri c4 Cn C r C r C o A Cl C" N" Czw>: C"I t,C- t.C CC "" A"" C .CC CCIC CC 0 C CC Table 3.3, CQOIDITT EXPORtTS, 1968-76-' (Value, t-Nikeda of Dollars; Volume: Tons) (Est.) Projected 1968 1969 1970 1971 1972 1973 1974 1975 1976 I. Wood Produ,cts (1.2,3) Value ~~~~~~~8,5090 13,265 12,680 11,230 10,180 9,930 10,710 11,330 14,705 Volum 181,290 197,435 191,600 ~~~~150,000 117,850 103,300) 101,300 102,000 107,400 US/Ton 47 67 67 75 86 96 106 311 113 Yilus £,~~~~~~~~~~~5954, 6,869 6,630 4,,000 2,000 1,000 250 - - Volume 148,84~3 137.371 132,600 80,000 640,000 20,000 5,000-- US/Ton 40 50 50 50 50 50 5o - - 2. Lustoer v-aruo ~~~~~~2,275 5,695 5,170 6,110 6,960 7,5915 9,000 9,690 11,960 volume 31,160 56,062 55,000 65,000 72,500 77,500 90,000 95,000 115,000 US$/Ton 73 92 94 96 96 98 100 102 104 3. Menufac tured Value ~~~ ~ ~~~~280 701 800 1,120 1,220 1,335 1,4,60 1,61.0 2,74.5 Volume 1,279 3,202 4,000 5,000 5,350 5,600 6,300 7,000 11,630 US/Ton 219 219 220 224 228 230 232 2314 736 II. Livestock Produrts (1.2.3.4) 19,30 1,3 22,259 2131 19.0 217 26.013 773 29,690O 1. 9sef (a.b.c.d) Ta-lue ~~~~~~~16,688 15,196 19,054, 18,701 19,34,0 21,1,16 23,124 26,665 26,193 Volume 19,281 20,481 25,770 25,730 25,745 28,505 30,230 31,4.95 32,625 US/Ton 855 742 740 727 751 706 765 783 803 a. Canned 1Neat T&M-9 ~~~~~13,675 12,298 9,990 9,565 9,700 11,330 11,660 12,315 1.2,935 Volume 15,211, 16,667 11,100 10,340 3,700 11,000 11,000 11,300 11,500 US/Ton 899 850 900 925 1,000 1,030 1,060 1,090 1,125 0. Frosen meat Ta-rue- ~~~~~13 870 7, ooS 7,266 7,961 8,112 9,387 10,161 10,962 Volume 22 1,795 10,380 10,500 11,200 11,200 12,600 13,300 16,00c US/Ton 600 485 675 692 709 727 74,5 764 785 C. Meat Extract Mue ~~~~~~2,226 1,261 1,259 911 716 651 651 673 6A1 Volume 506 286 290 210 165 150 150 155 160 US/Ton 4,399 4,339 4,340 4,31,0 4,31,0 4,360 4,31,0 4,31,0 ,340 a 5~~ ~ ~~~~~76 787 800 959 983 1,323 1,1,26 1,516 1,602 Volume 3,532 3,933 6,000 6,680 6,680 6,155 6,680 6,74.0 6,965 US/Ton 162 200 200 205 210 215 220 225 2310 2. Horse Meat Ta- ru e- l'IL~~~1,101 1,139 975 590 325 325 325 325 325 Volume 5,822 3,776 3,000 1,820 1,000 1,000 1,000 1,000C 1,000 US/Ton 241 302 325 325 325 325 325 325 325 3. Hides and Skins Value ~~~~~~~1,127 1,1,18 1,890 1,800 1,935 2,076 2,221, 2,623 2,632 Volume 7,722 7,088 8,600 7,830 6,065 11,305 8,555 8,610 9,075 US/Ton 146 200 220 230 240 250 260 275 230 6. Other Meet Producta 304 3 77 34,0 34,0 340 34,0 31,0 360 31,0 III. Agriculturs.l Produ,cts (1 through 6) 22,116 2, 29,168 302L 9 32,1102 36,928 36,95 38,63 Lj~ 1.To0acco raTU-6 4~~~~~~,523 6,288 6,535 6,901 7,603 8,362 9,157 10,012 11,059 Volume 15,007 19,65o 19,500 20,600 21,600 22,600 23,600 26,600 25,900 US/Ton 301 320 335 335 352 370 38b 4,07 427 2. Cotton TiTU-6 ~~~~~~1,535 3,527 4,4,00 4,600 6,800 4,900 5,o55 5,215 5,635 Voluim 4,450 8,559 11,000 11,000O 12,000 12,500 12,9~00 13,300 14,300 US/Ton 365 412 4,00 600 4,00 392 392 392 380 3. Yerba Mate Value ~~~ ~~~~632 597 590 600 600 600 600 b00 600 Volume 5,309 5,970 5,900 6,000 6,oo0 6,000 6,000 6,000 6,000 USITon 119 100 100 100 100 100 100 100 100 V.! !alue s 2781 ig 8 189 197 205 213 222 231 Volume 2,785 1,5ol 1,400 ~~~~~~~1,455 1.515 1,575 1,61,0 1,705 1,775 US/Ton 101 132 130 130 130 130 130 130 130 5. Fresh Fruits Value ~~~ ~~~~130 120 158 166 175 183 192 202 212 VolToe 2,357 1,660 2,200 2,310 2,425 2,54,5 2,670 2,805 2,94,5 US/Ton ~~ ~ ~~~~55 72 72 72 72 72 72 72 72 6. Canned Fruits Iralue ~~~~~~~376 241 513 539 566 593 622 653 686 Volume 966 677 1,500 1,575 1,655 1,735 1,820 1,910 2,005 UIS/Ton 389 356 34,2 342 362 362 34.2 342 34.2 Taole 3.3 (Cont'd) 1968 1969 (Est.) Projected ________ 1968 ~~~~~ ~~~~~ ~~~~~ ~~~~1969 1970 1971 1972 1973 1976 1975 1976 III. Agricultural Products (7 through 13) 7. Coffee 7alu-e 1,895 954 915 963 924 1,170 1,112 1,056 1,056 Volume 2,878 1,517 1,500 1,500 1,500 2,000 2,000 2,000 2,000 US/Ton 658 629 629 642 616 585 556 528 528 o6. Corn Value - - - 16 308 593 906 1,217 1,619 Volume - _ - 1,000 6,700 12,900 19,700 27,100 35,200 US/Ton - - 86 46 66 16 146 16 9. Vegetables Oils and 9y-Products 6,755 7,359 8,223 8,730 9,1458 9,919 10,1959 10,870 11,857 (asb o dse) a. Tung Oil Value 2,653 3,378 3,210 3,300 3,516 3,731 3,948 3,86L 1,050 Volume 12,910 11,003 10,000 11,000 12,000 13, 000 11,003 11,000 15,000 US/Ton 205 307 321. 300 293 287 282 276 270 o. Coco Oil ValTu-e 2,716 2,398 2,378 2,125 2,171 2,523 2,573 2,622 2,672 Volume 8,079 8,840 8,800 9,150 9,515 9,895 10,290 10,700 11,130 US/Ton - 336 271 270 265 260 255 250 215 210 c. Soya Oil Value - - - 350 670 788 908 1,05L 1,205 Volume - - - 1,230 2,350 2,o15 3,330 3,905 4,585 US/Ton - - - 285 285 280 275 270 265 d. Pellets and Expellers Value 1,240 1,553 2,575 2,625 2,768 2,617 3,000 3,300 3,900 Volume 30,235 32,350 51,900 52,500 55,360 56,910 60,000 66,00) 78,000 US/Ton 11 48 50 50 50 50 50 50 SO e. Other Vegetaole Oils 16 25 30 30 30 30 30 30 30 10. Petti-Grain Oil Value 1,553 1,786 1,960 2,075 2,298 2,538 2,791 3,062 3,376 Volume 381 396 135 1460 190 520 550 580 615 US/Ton 4,075 1,510 ,910 14,510 1,690 1,880 5,075 ,260 5,190 11. Other Essential Oils Value 150 157 212 230 218 269 326 370 1O0 Volume 115 92 120 130 110 199 170 189 200 llS/Ton 1,301. 1,636 1,772 1,772 1,772 1,840 1,919 2,000 2,JOO 12. Queoracho Extract Value. 2,0514 1,911. 1,950 1,920 1,875 1,t30 1,770 1,725 1,681 Volume 17,126 16,119 14,4.50 15,000 15,000 15,000 15,000 1]5,000 15,000 US/Ton 118 119 132 128 L25 122 118 L15 112 13. Canned Palmito Value 2,232 2,812 3,500 3,500 3,750 3,750 3,750 3,100 3,10O VoLume 1,621 5,684 7,000 7,000 7,500 7,500 7,500 6,U00 6,800 US/Ton 183 500 500 500 500 500 500 500 500 fkl. Cement VaLue - 116 120 183 693 810 911 955 1,003 Volume - 4,625 20,000 23,000 33,000 80,000 13,500 15,500 17,750 US/Ton - 25 21 21 21 21 21 21 21 V. Muloerry - - 16 118 311 733 880 2,575 3,200 VI. Others 2,353 1,720 2,500 2,525 2,810 2,980 3,160 3,350 3,600 TOTAL 52,298 59,209 67,01.3 66,016 68,766 73,598 78,630 8I,597 93,609 1/ 1968-70 differs from aforo values (declared value) since sales values had oeen estimated on the basis of exporter's prices and equivalent international prices discounting freight differential foom Asuncion to Buenos Aires. Source: Central 9ank, CEPEX (Export Promotion Center) and mission estimates and projections. Table 3.4: COMMODITY IMPORTS (FOB), 1962-69 (in millions of US dollars) Average Annual 1962 1963 1964 1965 1966 1967 1968 1969 Percent Charge 1962-1969 I. Consumer Goods 23.3 23.8 30.0 27.6 31.9 26.6 34.7 38.0 7.2 a) Foodstuffs and Beverages (7.4) (7.6) (6.8) (7.0) (6.2) (7.9) (11.1) (14.0) (9.5) b) Other Consumer Goods (6.1) (6.7) (7.0) (11.3) (12.7) (13.6) (15.3) (13.2) (11.6) c) Unclassified 1/ (9.8) (9.5) (16.2) (9.3) (13.0) (5.1) (8.3) (10.8) (1.5) II. Primary and Intermediate Materials 7.3 8.1 7.8 8.7 10.3 14.9 12.0 12.0 7.4 III. Capital Goods 10.4 6.2 8.1 15.6 16.5 20.4 22.0 26.7 14.4 IV. Fuel and Lubricants 3.5 4.0 4.1 4.9 4.5 3.8 4.9 4.5 3.6 TOTAL 44.5 42.1 50.0 56.7 63.2 65.7 73.5 81.2 9.0 IMPORTS COMPOSITION (is a percent of total) I. Consumer Goods 52.4 56.5 60.0 48.7 50.5 40.5 47.2 46.8 II. Primary and Intermediate Materials 16.4 19.2 15.6 15.3 16.3 22.7 16.3 14.8 III. Capital Goods 23.4 14.7 16.2 27.5 26.1 31.0 29.9 32.9 IV. Fuels and Lubricants 7.9 9.5 8.2 8.6 7.1 5.8 6.7 5.5 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1/ Balance of Payments adjustments,mostly unrecorded consumer goods imports. Source: Central Bank and mission estimates. Table 3.5: STRUCTURE OF DIFORTS IN RELATIONS TO NATIONAL INCOME AGGREGATES, 1962-76 (in- millions of 1969 Ouaranies) Imports of Value Added in Imports of Inter- Imports of Fuel Gross Fixed Imports of Gross Domestic Total Year Consumption Consumer Goods 2/3 Manufacturing mediate Goods 5/6 and Lubricant Investment Capital Goods 9/10 Product Imports 12/13 (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13) (14) 1962 46,846 3,422 7.3 8,337 1,072 12.9 514 8,235 1,527 18.5 52,913 6,535 12.4 1963 46,072 3,336 7.2 8,339 1,136 13.7 561 8,335 869 10.4 53,704 5,902 11.0 1964 47,207 4,089 8.0 8,783 1,063 12.1 559 8,793 1,105 12.6 55,532 6,816 12.3 1965 51,170 3,698 7.2 9,214 1,165 12.6 656 8,709 2,090 24.0 59,343 7,609 12.3 1966 52,559 4,153 7.9 9,439 1,341 14.2 586 10,188 2,148 21.1 60,259 8,228 13.6 1967 55,424 3,473 6.3 10,440 1,945 18.6 496 11,518 2,663 23.1 64,270 8,577 13.3 1968 58,213 4,5°4 7.7 10,088 1,557 14.3 636 12,704 2,855 22.0 67,182 9,552 114.2 1969 (Pre) 60,786 4,880 9.8 11,374 1,512 13.3 567 12,504 3,364 26.9 69,904 10,231 14.6 1970 (Est.) 61,449 4,221 6.9 11,943 1,512 12.7 630 12,318 2,457 19.9 73,633 8,820 12.0 Projected 1971 64,790 4,478 6.9 12,900 1,688 13.1 693 14,945 3,717 24.9 76,680 10,546 13.8 1972 67,210 4,675 7.0 13,930 1,877 13.5 756 17,200 4,183 24.3 81,950 11,491 14.0 1973 71,290 4,9114 6.9 15,045 2,092 13.9 832 18,235 4,700 25.8 86,865 12,537 14.4 1974 74,170 5,242 7.1 16,250 2,331 14.3 920 20,950 5,355 25.6 92,075 13,847 15.0 1975 79,095 5,506 7.0 17,550 2,596 i4.8 1,008 22,315 6,174 27.7 98,060 15,284 15.6 1976 84,090 5,809 6.9 18,955 2,885 15.2 1,084 23,765 7,056 29.7 104435 16,960 16.2 Source: Central Bank. Mission estimates and projections. Table 3.6: INTERNATIONAL RESERVES, 1961-69 Tin millions of US dollars) 1961 1962 1963 1964 1965 1966 1967 1968 1969 1. Central Bank (a + b) 1,085 -687 194 3,004 8,623 7,780 7,692 6,900 5,402 a. Gold 82 81 81 81 1,018 82 82 82 82 b. Foreign Exchange 1,003 -768 113 2,923 7,605 7,698 7,610 6,818 5,320 i. Dollars (1,670) (-259) (-339) (3,175) (6,o86) (6,608) (7,553) (5,518) (3,722) ii. Other Currencies (-667) (-509) (452) (748) (1,519) (1,090) (57.) (1,300) (1,598) 2. National Development Bank 103 17 -273 -334 -196 -_2234 -2,675 -4,678 -6,404 3. Commercial Banks 229 -1,712 -732 449 -2,777 -3,795 -7,497 -7,957 -7,855 4. Net IMF Position -438 1,312 1,812 2,312 2,812 3,750 3,750 3,750 3,750 Total 979 -1,070 1,001 5,431 8,462 5,501 1,270 -1,985 -5,107 Source: Central Bank. Table 3.7: POSSIBLE COMMTTMENTS AND DISBURSEMENTS OF EXTERNAL LOANS, 1971-76 (in US$ millions) Commitment Date Loan DISBURSEMENTS Purpose Amount 1971 1972 1973 1971 1975 1976 GRAND TOTAL 10,j70 21,310 27,085 23,150 30,930 26,575 1971 h9 015 10,t!7O 15 250 13,550 8,075 1,700 Secondary Education - IDA 3, - 1,000 1,000 1,000 Wood Processing Industry - IFC 7,000 3,500 3,500 Agricultural Credit and Infrastructure - IDB 11,250 2,200 h,250 1,250 2,850 700 Electric Power (ACARAY II) - IDB 17,325 2,300 1,500 7,300 3,225 PL-480 Wheat 1,500 1,500 Industrial Credit - KFW 3,500 500 1,000 1,000 1,000 Expansion Cement Plant, Suppliers 1,600 1,600 Other Suppliers 370 370 1972 23,50 6 0 9,795 5 475 2,120 Tourism (Tourist Facilities and Accommodations) IDA 3,000 2,000 ` Highways Plan Triangulo IBRD 8,500 1,500 3,500 2,000 1,500 Preinvestmnent Studies - IDB 1,125 100 b00 325 Wood Processing Industry - IDB 1,500 1,000 2,000 1,000 500 Telecommunications - IDB 2,250 1,000 1,250 PL-h80 Wheat 1,500 1,500 Electric Power, Suppliers 2,575 1,160 895 400 120 1973 19,425 3,710 5 815 5,370 3,000 Livestock - IDA 6,00 2,000 2,500 Agricultural Freezing Storage - IDA 2,500 815 815 870 Housing - IDB 6,000 1,500 1,500 2,000 1,000 PL-1h80 Wheat 1,500 1,500 Tourism (Airport Terminal Facilities) AID 3,000 1,000 1,500 500 Other, Suppliers 125 125 197I 23 035 3,785 10 680 5,130 Forestry and Wood Processing - IBRD 1,000 ,500 Mechanized Agriculture - IDA 10,000 1,000 5,000 3,000 Colonization - IDA 3,700 200 680 680 Tourism (Tourist Facilities) - IDB 2,250 1,000 1,000 250 PL-80 Wheat 1,500 1,500 Other Suppliers 585 585 1975 32 320 11 060 13 160 Vegetable Oil Processing Plant - IBRD 5 20 , Tourism (Tourist Facilities) - IBRD 3,000 2,000 500 Bridge over Paraguay River - IDB 1,500 1,000 3,000 Highways - IDB 2,000 1,000 1,000 PL-tL80 Wheat 1,500 1,500 Primary Education - AID 1,000 1,900 1,900 Industrial Credit - KFW 3,500 1,000 1,000 Agriculture, Storage Facilities Suppliers 3,500 850 1,350 Agriculture, General Imports Machinery, Suppliers 5,000 190 1,!10 Other Suppliers 320 320 1976 28,095 1,985 Secondary Education - IDA 3,500 1,000 Agro Industry - IDA 5,000 1,500 Highway - IDB 1,200 1,200 Forestry Development - IDB 1,000 - Higher Education - IDB 2,000 - Water Sanitation - IDB 3,800 - PL-h80 Wheat 1,500 - Agricultural General, Suppliers 500 250 Anti-Red Ant Campaign, Suppliers l,300 130 Irrigation Suppliers 1,900 210 Other Suppliers 395 395 Source: Mission estimates. Projected on the basis of possible new projects indicated by the Government, not a forecast. Interest Grace Amortization IBRD: 7,25 5 years 20 years IDA: 0.75 10 years 50 years IDB: 3.00 6 years 30 years KFW: 3.00 6 years 25 years AID: 2.00 10 years 10 years Suppliers: 6.00 1 year 8 years IFC: 9.50 3 years 10 years Table 3.8: EXTERNAL RESOURCES BALANCE AND ITS FINANCING, 1964-76 (in thousands of US dollars) Actual (Est.) ProJected-l/ 1964 1965 1566 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 Resource Gap 3,430 6,002 17,037 20,047 28,784 26,875 1,060 16,310 19,485 21,120 24,170 26,575 27,110 Private Investments 3,618 2,990 s43 542 1,335 4,11l 2,500 2,800 3,085 3,350 3,600 3,830 4,035 Direct Investments (4,348) (4,178) (2,935) (3,558) (2,506) (5,592) (5,000) (5,500) (6,ooo) (6,500) (7,000) (7,500) (8,000) Less: Dividends (-730) (-1,188) (-1,552) (-2,616) (-1,171) (-1,481) (-2,500) (-2,700) (-2,915) (-3,150) (-3,400) (-3,670) (-3,965) Official Lenders (Net) 3,042 8,799 15,680 16,014 22,341 21,419 4,050 26,930 34,495 30,425 18,660 24,781 12,380 IDB 2,543 4,392 14,174 6,972 7,970 7,468 5,310 13,210 20,030 20,940 15,975 11,250 4,310 Disbursements (2,607) (14,760) (4,550) (7,355) (8,501) (8,220) (6,225) (14,215) (21,240) (22,885) (17,650) (13,240) (6,450) Amortizations (-) (-258) (-260) (-258) (-357) (-515) (-575) (-680) (-785) (-655) (-525) (-525) (-525) Interest (-64) (-110) (-116) (-125) (-174) (-237) (-340) (-325) (-425) (-690) (-1,150) (-1,465) (-1,615) IBRD/IL'A 351 2,314 3,155 6,054 5,925 3,055 3,345 6,255 5,630 6,045 6,420 15,646 8,615 Disbursements (371) (2,323) (3,235) (6,129) (6,o58) (3,282) (3,820) (7,200) (6,870) (7,805) (8,415) (18,045) (11,680) Amortizations - - - - - - (-95) (-235) (-300) (-535) (-570) (-670) (-710) Interest (-21) (-9) (-40) (-75) (-133) (-227) (-380) (-710) (-940) (-1,225) (-1,425) (-1,720) (-2,355) IFC - - - - - - - 3,500 3,145 -665 -1,365 -1,300 -1,235 Disbursements - - - - - - - (3,500) (3,500) - - - - Amortizations - - - - - - - - - - (-700) (-700) (-700) Interest - - - - - - - - (-355) (-665) (-665) (-600) (-535) AID/EC[MBANK 1,400 -257 2,634 39 3,792 7,336 625 4,815 6,255 4,645 935 170 -645 Disbursements (2,158) (4,671) (3,262) (1,083) (4,814) (8,525) (2,900) (7,325) (9,135) (7,850) (4,200) (3,900) (3,400) Amortizations (-406) (-324) (-264) (-649) (-542) (-677) (-1,430) (-1,455) (-1,665) (-1,880) (-1,905) (-2,365) (-2,695) Interest (-392) (-382) (-364) (-397) (-480) (-512) (-845) (-1,055) (-1,215) (-1,325) (-1,360) (-1,365) (-1,350) KFW -1 1,054 667 660 274 582 265 3,240 3,550 2,830 445 215 235 Disbursements - (1,080) (756) (920) (713) (1,092) (340) (3,360) (3,830) (3,220) (1,245) (1,000) (1,000) Amortizations - (-2) (-26) (-126) (-275) (-353) - - (-110) (-220) (-485) (-G85) (-485) Interest (-1) (-24) (-63) (-134) (-164) (-157) (-75) (-122) (-170) (-170) (-315) (-300) (-280) Suppliers and Financial Institutions -1,251 1,296 5,010 2,289 4,380 2,978 -5,495 -4,090 -4,115 -3,370 -3,750 4,200 1,100 Disbursements (211) (3,540) (6,474) (4,124) (7,037) (5,057) (1,890) (3,110) (2,300) (2,320) (1,985) (2,785) (5,045) Amortizations (-1,335) (-2,005) (-1,213) (-1,457) (-2,376) (-1,684) (-5,765) (-5,670) (-4,950) (-4,390) (-3,340) (-3,045) (-3,120) Interest (-123) (-239) (-251) (-378) (-281) (-395) (-1,620) (-1,530) (-1,465) (-1,300) (-2,395) (-940) (-825) Donations (Net) 2/ 3,348 3,485 1,807 2,137 2,438 2,679 2,700 2,700 2,700 2,700 2,700 2,700 2,700 Change in Reserves- -4,430 -3,031 2,961 4,231 3,255 3,122 -3,000 -11,415 -17,140 -15,225 -2,555 -5,485 6,830 Specia /Drawing Rights - - - - - - -2,500 -2,000 -2,000 - - - - Others- -2,148 -8,21,1 -14,354 -3,277 -585 -4,456 -2,690 -2,705 -1,655 -130 1,765 749 1,165 Total Financing 3,430 4,002 17,037 20,047 28,784 26,875 1,060 16,310 19,485 21,120 24,170 26,575 27,110 1/ Projected on the basis of existing projects and possible new projects indicated by the Government. Not a forecast. 2/ Minus equals an increase in reserves. 3/ Includes short term capital, other capital and errors and omissions. Source: Central Bank and mission estimates and projections. REVISED Table 4.1: PARAGUAY - EXTERNAL PUBLIC DEBT OUTSTANDING AS OF DECEMBER 31, 1969 /1 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Debt Outstanding Source December 31, 1969 Disbursed Including only undisbursed TOTAL EXTERNAL PUBLIC DEBT 89,449 133.l Privately held debt 25,608 33,990 SupDliers 25,125 33,507 Argentina 1,106 2,822 Germany 8,206 9,931 Italy 13,239 15,126 Japan 203 203 Spain 563 563 Sweden 755 1,100 Switzerland 24 24 United States 631 3,267 Others 398 471 Financial institutions - United States 483 483 Loans from international organizations 27,811 39,501 IBRD ,929 11,350 IDA 16,551 21,boo IDB 6,328 6,751 Loans from governments 35,742 59,932 Brazil 27 27 Canada 596 740 Czechoslovakia 3 3 Germany 3,743 11,465 Spain 3,806 3,806 United States 27,567 43,891 Nationalization 288 288 S Debt with an original or extended maturity of over one year. Statistical Services Division Economics Department REVISED Table 4.2: PARAGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCIUDING UNDISBURSED AS OF DECEMBER 31, 1969 Debt Repayable in Fbreign Currency (In thousands of U.S. dollars) Page 1 UEET OuTST (BLGIN OF PERZIUi.) PAYIENTS OURING PERIOD INCLUDING A'0RTI' YLAM UNUISBUR6EU ZATION INT.ReST TOTAL TUTAL EXTERNAL PUBLIC DEBT 19l1 130,121 8,578 3#b12 12,089 1911 121,o44 8#670 3,627 12,298 1912 112,874 8,381 3,:53 11*933 1913 104,493 8,039 3.374 11,414 1914 96,#454 6,93U 3,259 10,188 19It 89,524 6,590 2,948 9,546 19r6 82.926 6o261 2*603 8,864 191r 76r665 5S922 2,406 80329 191B 70,9743 5,254 2,116 7,37() 1979 65,469 5,299 1,895 7,195 19ou 60, 19( 3,59b 1#668 5,266 19 d1 56,S91 3,424 1#528 4#952 19d2 53,168 3,296 1,394 4,690 196d 49#872 3,134 1.271 4,404 19 4 46,749 3,R131 1,147 4,278 190b 43,60d 2#702 1,i33 3,734 1986 4U,906 2,674 934 3,608 1907 38,232 2,312 d43 3,225 1908 35,65u 2, 198 167 2,965 1909 33,652 2'V222 699 2P921 1990 31,430U 2,092 631 2,723 Note: Includes service on all debt listed in Table 1 prepared January 22, 1971, with the exception of the following, for which repayment terms are not available: Total $3,590,000 Suppliers 535.00° Loans from governments Brazil 27,000 Czechoslovakia 3,000 Germany 2,722,000 REVISED Table 4.2: PARAGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT VUTSTANDING INCLUDING UNDISBURSED AS OF DECEM13ER 31, 1969 (cont.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 2 ALbT OJTSr (dLGIt OF PLRIOLi) PAYMLNTS OURING PERIOD INCLUDING A"ORTIT YLAN UNoISSURSLU ZATI0 INTERLST TOTAL PkIVA1'ELYmHELD OLBT 19(U 33#15k 5,751 19619 703TU 19(1 27#4u2 5,629 1,472 7,101 9T;2 21*7TS 4,845 10284 6,12Y 1973 16,927 4,284 1,050 5,334 1974 12,643 2,985 r99 3,785 19(5 9,65s 2,409 615 3,024 19 6 7,249 2,284 452 2,036 19{1 4,965 2,219 ;995 2,514 1978 2,146 1,440 154 1,594 19(9 1,.JU6 1,306 64 1,370 SUPPLIERS 197( 32,669 5,517 10569 7,106 19Y1 27#152 5,396 1,459 6,85t 191i 21o756 4,829 1..28 6,112 19,. 16,92? 4,284 10050 5,334 1914 12#643 20985 799 3,785 19(5 9,658 2#409 615 3,024 19,8 7s249 2#284 452 2,736 1917 4,965 2o219 295 2,514 1978 2,746 1#440 154 1p594 1979 1#Ju6 1#3u0 64 1,370 REVISED Table 4.2: PARAGUAY - ESTIMATED FUTURE SERVICE PADYENTS ON EXIERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDIS3URSED AS OF DECEMBER 31, 1969 (cont.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 3 DE8T UUT5T (BLGIN 0F PtLR10u) PAYMLNTS DURING PERIOD INCLUDING AqUNTI' YLAN UNhISBURSE ZATION INTERLST TOTAL PRI1VAILLYOHELD OL9T FlNANCIAL INST1tITIONS 1970 4es 233 30 263 1971 2:u 233 14 247 1912 17 it 1 17 LOANS ]M INTENATIONAiL ORGANIZATIONS l9y( 39*5U1 668 120 1.389 19r1 38.833 914 865 1,779 19(2 37.919 1.085 661 1*946 19(3 36.844 988 9V2 IP69U 1914 35.846 892 960 1.852 19?5 34.954 90o 961 1,868 1916 34#047 10002 916 1,918 191? 33,045 1.O01 669 1,886 19-1 32.028 1,037 823 1.86U 1919 30,991 1.124 773 1,89? 198U 29.867 863 723 1.586 1981 29#004 835 683 1.518 1962 28,169 98: 643 1,629 19C3 27.184 1.056 602 1,658 1904 26.12B 10127 556 1,684 19b5 25.OUU 1,162 509 10672 19d6 23.838- 1*24? 462 1.7O9 1961 22#591 1.177 417 1,595 198t 21,414 1.096 318 1#4?4 1YnYv 220318i 1.159 343 1*502 1990 19J159 1,067 JuT 1,374 REVISED Table 4.2: PARAOUAY - ESTIMATED FUTURE SERVICE PAIMENTS ON EXTERNAL PUBLIC DEBT OU73TANDING INCLUDING UNlDISBURSED AS OF DECEMBER 31, 1969 (Cont.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 4 ULBT OUU1ST (BkGIN OF PLRIUDL PAYML4TS O)I1NG PERIOD INCLUDING AS40RTI- YLAN UNDISBURSbU ZATIOs4 INTERLST TOTAL IDAS FROM INTERNATIONAL ORGANIZATIONS 19v'( 11,350 95 2406 341 19W1 110255 235 391 626 1912 11#020 240 411 651 191* l0,u '25S 492 747 1914 10,525 270 502 852 191? 10255 285 612 89? 1916 9.970 305 596 901 19?T 9,665 32i 578 690 1We0 9,345 340 561 901 1919 9,005 -405 540 945 1900 8-600 490 5i5 1,005 1901 8,110 515 485 1.000 1962 7.595 545 455 1,00OO 190bi tOb0 58U) 423 1,003 1904 6#47U 615 387 1.002 1985 5,bsS 65o 350 1,000 1906 5,205 585 jl1 398 1901 4,620 515 219 794 1900 4,105 544 249 789 1909 3,565 656 216 778. 199u 3,OU5 425 18T 612 IuA 19V 21,400 * 133 13 19t1 21,4)' 149 149 1912 21,400 65 158 218 1913 21,34l id 160 236 1914 21#202 96 159 255 1915 21,166 96 159 255 19(6 21,070 171 158 329 1917 20,899 171 156 327 19t1 20,726 171 155 326 19t9 20,55>1 193 154 346 1900 20,365 214 152 360 1901 20.151 214 151 365 1902 19.93? 334 149 483 1913 19.0U3 370 146 516 1904 19,233 406 143 549 190b 18..b27 400 140 546 1906 18,421 550 137 693 1901 1*865 556 133 689 1Y90 17,309 556 129 685 1909 16,913 59V 125 r24 1990 16,154 642 120 762 REVISED Table 4.2: PARAGUAY - ESTIMATED FUIURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (cont.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Pare 5 DEBT 0Du5TI (BLGIN OF PLRIOU) PAymLNTS DURING PERIUO INCLUDING AMURTI. YLAR UNOISBLR6LO ZATION INTERLST TOTAL IOANS FROM INIERNATIONAL ORGANIZATIONS 19U 6,0751 574 3541 915 1911 6.178 679 325 1.004 19F2 5*499 785 292 1.077 19(3 4p714 655 250 905 1914 4 059 526 218 744 195t 3,533 526 191 7t7' 1906 3,U07 526 163 68V 19?? 2,481 526 135 661 1978 1,955 526 108 634 1979 1,J429 526 60 606 19Uo 903 159g 56 214 1951 744 106 47 153 19ti 636 10o 40 146 19dJ 541 11)6 £3 139 1904 425 106 26 132 19dt 319 108 19 125 1956 213 106 12 11t 19o7 b6 106 5 111 LUAN6 FROM GUVLRNMENTS 1970 5T,18O 2.134 1.172 3J308 19(l 55*U47 2.10£ 1,290 3,39J 19(2 52*944 2P425 1.406 3,833 19(4 50,519 2P742 1.422 4p164 1914 47#741 3.027 1.500 4,52? 19-(5 44,750 3,258 1'372 4#629 196t 41.492 2.950 1J235 4,185 1917 38.542 2.661 1.243 3.904 1978 35#861 2.752 1J138 3.890 19?y 33J130 2,8'45 1.058 3,903 19bU 30.285 2.710 945 3.655 1981 27s515 2.576 846 3.422 1982 24J999 2.311 751 3,061 1963 226688 2,077 669 2.746 1904 20.611 2J004 590 2*594 19 0 180,60 1,54U 523 2.063 1906 17.u6b 1.42r 472 1.899 1907 15.641 1J205 426 1p630 190b 14,436 1J102 369 1,491 19v9 13.334 1,063 456 1J419 199u 12.271 1A025 £24 1,349 REVISED Table 4.2: PARAGUAy - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 (cont.) Debt Repayable in Foreign Currency (In thousands of U, S. dollars) Page 6 D E *1 0 U I S T (BEGIN OF PRLH0J.) PAYMENTS DURING PERIOD INCLUO1NQ AM0XRTI% rLAH UNuISBURSED ZATMO INTERLST TOTAL LOANS FROM GOVERNMENTS CdANAD 1910 740 * 5 S 1911 ?4u 6 6 1972 740 . 6 6 l971 740 * 6 6 1974 740 * 6 6 19 7 740 * 6 6 1976 740 * 6 6 19?7 740 31 5 42 1910 703 31 5 42 19tv 666 31 5 42 1960 629 3t 5 42 1901 592 37 4 41 1902 555 37 4 41 190S 518 31 4 41 19t4 461 3t 4 41 19i5 444 3? 3 40 1986 4r? 37 3 40 1VYa 37U 37 3 40 19d0 333 37 2 39 1909 296 3? 2 39 1990 259 3I 2 39 GEMANY 19rU 874 * rr 1971 8,743 * 122 122 1972 8,743 109 171 280 1973 8,034 219 171 390 1974 8,415 485 317 802 19?5 ?,930 485 Ju 786 1916 7,445 485 261 766 19?F 6#960 485 -261 746 1978 6,475 485 241 726 191y 5*990 48S 221 7O6 1900 50504 485 21) 686 1961 50019 485 181 666 1902 4,534 485 161 646 19kj 4, 049 485 141 626 1904 3,564 485 121 606 1905 3, 079 485 101 5BO 1906 2,594 485 a1 566 190? 2,1o8b 376 61 437 1988 1,73) 267 50 317 1969 1,466 267 42 309 19'1u 1*2U0 26t 34 301 REVISED Table h.2: PARAGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING INCLUDING UNDISBURSED AS OF DECEMBER 31,.1969 (conk) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 7 UE.bT OuJST (bLGIN OF PFl1UU) PAymLNTS OUQlNG PERIOO INCLUOING AkORTI yEAth UNU1SBURSED ZATIO, INTERLST TOTAL LOANS FROM GOVERNMENTS SPAIN 19tv 3 8. 704 245 949 1971 301V2 650 199 848 1912 2452 65u 157 806 197S 1,*tS(2 644 115 756 1914 1,159 636 72 709 19f! 522 522 31 554 UNITEO STATES 1910 43,8 91 1430U o48 2,277 1911 42P461 1,453 964 2,416 1912 41m009 1,666 1U005 2,741 1973 39,342 1,88u 1,131 3,011 19r4 37,463 1,906 1.105 3,011 19.5 35S557 2.250 1,034 3,284 1976 330307 2#465 948 3,413 19?? 30,842 2,139 977 3,ijS 1978 28,704 2*230 892 3,122 1979 26,474 2,323 832 3*155 1980 24,152 2#186 739 2,927 1981 21,963 2,054 660 2,714 19t82 19,909 1.788 b:86 2.*3?4 1983 18,121 1,555 524 2,079 1984 16,566 1,482 466 1,947 1985 15,005 1001? 419 1,436 1986 14*U67 905 388 1,293 1907 13,163 792 362 1a154 1968 12,371 796 S33 1,135 199b 11,572 760 112 1,071 1990 10,813 721 288 1,010 Tabjle_4.2..RVSE Tabl 4*2: PARAGUAY - ESTIKATED FUTURE SERVICE PAMMTS ON EXTERNAL ]PUBLIC DEBT OUTS TANDrNG INCLUDItNG UNDISBURSED AS OF DEC1BER 31, 1969 Debt RepaYable in Foreign Currency (IT thousands of US. dollars) Page B DEBT DQTST (BEGIN of PERIOO) PAYMENTS DURlNB P[RIOD INCLUOING A4ORTIo yLAR UNOISOURIED ZATION IIlRSYT TRT. NATIONAL1ZA7t1ON 19?0 266 25 25 £971 263 2 25 1972 23b 25 ' 25 1973 213 25 ' 25 1974 too 25 2* 19rT 163 25 ' 25 19T6 l13 25 25 19?? Il) 25 a 19,7 B8 25 12 1979 03 25 25 MU9bV 3B 25 , 25 _I 13 * 1) Statistical Services Division Econogics Dspartlaent Table 4.3: PARAGUAY - EXTERNAL PUBLIC DEBT OUTSTANDING, BY SECTOR, AS OF DECEMBER 31, 1969 /1 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Debt outstanding December 31, 1969 Sector Disbursed Including only undisbursed TOTAL EXTERNAL PUBLIC DEBT 81,700 120,046 Central Government 47,841 65,341 National Development Bank 10,558 22,382 Public Entities 21,317 28,647 Private with public guarantee 1,984 3,676 /1 Debt with an original or extended maturity of over one year. Statistical Services Division Economics Department Table 4,4: PARAGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, BY SECTOR, INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 1 DEBT OU[ST (BEGIN OF PtRIOU) PAYMLNTS nURING PFR1Ldn INCLUDING A4ORTI- YEAR UNDISBURSED ZATION INTEREST ilTAI 1JTAL. EXTERNAL PUBLIC LEjLt 1910 116,620 5,071 3,328 9,l135 19(1 110,913 5,984 3P531 9P51- 1972 104,929 6,052 3*325 9,377 1973 98,8eor 5,979 3,041 9,n21 1974 92p8Yd 5,962 2#915 3, R1? 1975 86,936 SJ 73d 2t652 8,939( 1976 81.198 5,5R5 ?.3Br 7,972 1977 75,613 5,384 2'23d 7,o6?3 1918 70,226 4,804 1,983 6,786 1979 65,425 4,937 1,s86 6,723 1980 60,488 3,423 1,578 5 001 1981 57 065 3,431 1'441 40ifN 1982 53,628 3,036 lp3Ot i 344 1983 50P5V2 2,874 1,196 84,7? 1984 47,71t 2*872 1,087 3,959 Note: Includes service on all debt listed in Table 10 prepared September 24, 1970 with the exception of the following, for which repayment terms are not available: Total $ 3,426,000 Central government 61,000 National Development Bank 2,558,ooo Public entities 675,000 Private with public guarantee 132,000 Table 4.4: PARAGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, BY SECTOR, INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 2 DEBT OUTST (BEGIN pF---ER'AT0 P-AYkENTSN UR- N-GPE 1" INCLUDING AMORTrI YEAR ---UNDISSU-RSE D ZAT Iow IN-ERSAT- - TItAL CENTRAL GOVERNMENT 1970 65*280 2,236 .19623 .3#859 197if 63io44 24292 1,62A It916 1972 60*752 2P383 1.574 _ 3.957 1973 58D 369 2,43? 1.514 3.951 1974 55*932 2.491 l*445 3.936 -195 5 3.s442 2.S 1.3728 3.924 1976 50*845 2*561 1:192 3:754 1977 48,283-- 2j27r - 201- - -__ 197 466,006 1,730 1.107 29837 1979 *44276 1,883 '1I072- v 1980 42.393 2*038 1*001 3,o39 1981 *40,355 2*099 923 - -32Z 1982 389256 1*961 843 2.804 1983 -- 36?295 1I788 775- - 1984 34.S07 1,781 TOY 2,488 NATIONAL DEVELOPMENT BANK 1970 19*824 515 291 805 1971>____ __ 19,309 -8T - -- 66~~i7i -5Y 1972 18:522 697 504 1.200 973 1i7825 - 06 - - -- 9 1. 28 4 1974 17*020 806 439 1#245 1975 i6 214 486-6- -4S 6 1976 15.408 1*101 471 _ 1.572 1977 t 14,307 171 - -4 6 V5 1 1978 -13,206 1,117 383 1.500 1979-- 12j0B9 1 34 1980 10*955 819 294 1.113 1981- _---- -j10 36& __ ---- 289i 59-IOT o T 1982 9 317 546 228 775 19B3 8 7 --0 546- - - 209 T5W- 1984 _ 8:224 546 191 737 Table 4.L: PARAGUAY - ESTIMATED FUTURE SERVICE PAYMENTS ON EXTERNAL PUBLIC DEBT OUTSTANDING, BY SECTOR, INCLUDING UNDISBURSED AS OF DECEMBER 31, 1969 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 3 D-- ET uuIbI (BEGIN OF PLHIOD) PAYMENTS DURING PERIOD - ' NCLuDING'' AMORTI- yEAR UNDISBURSED ZATION INTEREST TOTAL PUBLIC ENTITIES 1970- 27#913 2P569 1#205 3.T74 1971 25J404 2,209 1J234 3,443 1972 23,195 2,279 1,092 3,371 1973 20,916 2 174 946 3.121 1974 18,741 2#439 969 3,408 197$ 16,303 2J316 822 3,1386 1976 13,987 1J906 684 2.S90 1917 12.081 1,886 571 2.458 1 9r8 10,195 1J836 461 2,297 1979 8,359 1.799 352 2s151 1980 6.560 498 267 765. 1981 6.062 503 246 748 1982 5#56o 513 224 736 1983 5.047 523 201 724 1984 4P524 528 178 706 PRIVATE WITH PUBLIC GUARAWNEE j970 3.544 464 183 647 19(1 3,080 774 205 9r9 --19-72 2307 174 153 926 19(3 1,533 644 100 744 1974 - 889 310 58 368 1975 579 105 43 148 -9T6 474 105 35 140 1977 368 105 27 132 19 6 263 105 18 124 1979 158 105 1o t15 1980 53 53 2 55 Statistical Services Division Economics Department Table/4.5: PARAQUAY - REPORTE]) ADDITION3S) TO EXTERNAL PUBLIC DEBT CONTRACTED JANUARY 1 - DECEMBER 31, 1970/1 Debt Repayable in Foreign Currency (In thousandp of U.S. dollars) Reported Additions -Source January 1 - December 31, 1970 TOTAL EXTERNAL PUBLIC DEBT ___865 Privately held debt 510 Suppliers - Argentina 230 Financial institutions Luxembourg 280 Loans from international organizations IBRD 6,ooo Loans from governments United States 8,355 ZI Debt with an original or extended maturity of over one year Statistical Services Division Economics Department Table 4.6: PAR.AQUAY - ESTIMATED FUTURE SERVICE PAYMEMTS O. REPORTED ADDITIONS TO EXTERNAL PUBLIC DEBT COiJThACTED JANUARY 1 - DECEEEER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 1 DEPT O:il ST (BEGIN OF PERI0O) PAYAENTS ?,:.RING pERIOD INCLiJOI NG AV'RTI-- yEAR UNDIS3uJ ,SEq 7ATION I,*TE')ST TOTAL TOTAL Ex'TER'!AL PU0LIC OIET 1970 U 14 4 1971 1',4,f51 27 215 242 1972 1'4,824 1'17 469 576 1973 14,717 1,.I1 536 643 1974 14,610 312 546 858 1975 14P298 396 529 9)6 1976 13,99C2 491 511 1,O02 1977 13,411 5.'15 491 992 1978 12,910 521 470 990 1979 12,3b9 5S4 448 961 1980 11,876 6?3 446 1,049 1931 11*273 691 441 1,132 1982 10e582 716 411 1P128 1983 9,865 741 3860 1,122 1984 9,124 771 347 1J 11A 1985 8,352 796 312 1,1n9 1956 7,556 826 275 1, 1 012 1987 6,730 861 236 1,o97 1988 5s868 896 194 1,rn9 1969 4#972 936 150 l,087 1990 4j,035 671 114 785 Note: Includes service on all debt listed in Table la prepared March 16, 1971. Table 4.6: PARAQUAY - ESTIMATED FUTURE SERjvICE PAMEINTS Ol REPORTED ADDITIH!,S TO EXTERNAL PUBLIC DEBT CONTRACTED JAj4UARY 1 - DECEMBER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 2 nERT OU'FST (BEGiNT OF PEIOC1)) PAy,!iTS DURIxIG P.RIOr INdCLUDING A -ORTI- YEAR UNDISURSEn 7ATIlf', INTEREST TMTAL PRIvA.TELY-HEL) DEBT 1970 U 14 - 14 1971 496 '7 7 34 1972 469 1e7 11 11t 1973 362 1^7 9 116 1974 255 117 8 115 1-975 148 67 6 73 1976 81 27 4 3? 1977 54 27 3 31 1978 27 27 1 21 SUP'-LIERS 1970 t 14 * 14 1971 216 27 7 34 1972 189 27 11 38 1973 162 27 9 36 1974 135 27 8 35 1975 108 27 6 33 1976 d1 27 4 32 1977 54 27 3 3( 1978 27 27 1 26 Table 4.,6: PARAQUAY - ESTIMATED FUTURE SERVICE PA.YM..TS 01 REPORTED ADDITIOINS TO EXTERNAL PUBLIC DEBT CONITRACTEiD JANUAR' 1 - DECEMRB- 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 3 DE T LiUTST CaEGIN OF PERIOW.) PAY:.*JTS SOU:ING PERIOD I N C L J D I IN r A ILRTI- YEAR UNDIS9URSED 7ATI!-4- I,%TE?EST TOTkL PRI;IATEL4Y-HELD DEST FINANCIAL INSTITJTIONS 1970 'a- 1971 280 - - 1972 260 10 * 80 1973 200 -' 1974 120 AQ V !f 1975 40 4C * 40 LOANS FROM INTERNJATIONAL ORGANIZATIONS T3 R 0 1970 - 1971 6,000 ' 169 169 1972 6,0000 369 369 1973 6,000 413 1974 6,000 2) 5 413 618 1975 5,795 215 395 613 1976 5,580 235 382 617 1977 5,345 245 366 611 1978 5,100 265 348 613 1979 4,835 285 328 613 1989 4,550 3i5 308 613 1961 4,245 3i5 286 611 1982 3,920 35Lj 262 612 1953 3,570 375 237 612 19k4 3,J195 4 n5 2!)9 614 19!5 2#790 43j 1-d0 61o 1986 2, 360 46') 149 609 1987 1,900 4Q5 116 611 I9El 4,435 53L 8`1 (1 19F9 875 57? 41 f1 1990 3u5 3.*15 11 3j6 Table 4.6: PARAQUAX - ESTIIIATED FUITURE SERVICE PAYIM4TS 014 REPORTED ADDITIOIiS TO EXTERNAL PUBLIC DEBT CONTRACTED JAI,URY 1 - DECE'MBER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 4 DERT O;JTST (3EGIN OF PERIOD) PAYt'E,'!TS 1U0ING -?ERIO0 IN CLJO I 1NG A stjRT T - YEAR UN0IS3URSED 7ATIOri If'TEREST TOTAL LOANS FROM GUx,iE[4vE2'TS UNITE,) STATES 1970 - U 1971 8*355 - 39 39 1972 8P355 B9 R9 1973 5,355 - 113 113 1974 B,355 125 125 1975 p3,355 11.4 125 24^ 1976 8,241 229 124 353 1977 OpO12 224 122 351 1978 7P783 229 121 349 1979 7p554 22,y 119 348 1980 7,326 295 139 436 1931 7,l28 366 ;55 521 19d2 6.562 366 149 5i5 1983 6*495 366 143 51r 19a4 5,929 366 138 554 1985 5,362 366 132 49R 1986 5,196 36i 126 493 1987 4,330 366 120 457 1966 4,463 366 115 481 1999 4,c,97 366 109 475 1990 3,730 366 103 470 Statistical Services Division Economics Departmentu -able 4.7: hPARAGUAY - REPORTED ADDITIONS TO EYTEI,N.L PUBLIC DEBT BY SECTOR, CONTIUCTED JANUARY I-DECKTBER 31, 1970 /1 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Reported Additions Source January 1- December 31, 1970 TO TAL EX?ERP.1 L PUJBLIC DEBT 14 865 Central Gover,r,ent 11 755 Loans froir international Organizations - IBRD ,ooo Loans from Governments - United States 5,755 National Development Banks - Financial Institutions 280 Public Entities - Suppliers 230 Private with Public Guarantee - Loans from governments - U.S. _2600 /1 Debt with an original or extended maturity of over one year. Statistical Services Divisicn Economics Departzient Table 4.8: PAIRAGUAY - EiTII'ATED FUTURE SERVICE PAYMENTS ON REPORTED ADDITIONS, BY SECTOR, TO &TTEI?.AL PUIBLIC DEBT CONTRACTFD JANiUARY 1-DECEBElR 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) ______________ ~~~~~~~~~~~Page 1 DEBT OUTST DEBT OUTST, YEAR (BEGIN OF PERIOD) PAYMEWlTS DURING PERIOD DISBURSE- (BEGIN OF PERIOD) INCLUDING ANORTI- MENTS NET OF UNDISBURSED ZATION INTERMT TOTAL UNDISBURS M TOTAL EXTERNAL PUBLIC DEBT 1970 _lL - l4 215 - 1971 14,851 27 267 294 9,250 201 1972 11s,82b 1.07 521 623 3,l10 9,424 1973 14,717 107 588 695 1,990 12,727 1974j 1b,610 312 598 910 - 1th,610 1975 lh,298 396 59L 991 - 14,298 1976 13,902 491l 585 1,076 - 13,909 1977 13,h1l 501 561 1,062 - 13,411 1978 12,911 521 534 1,055 - 12,911 1979 12,390 511t 508 1,022 - 12,390 1980 11,876 603 501 1,104 - 11,876 1981 11,273 693 L491 1,184 - 11,273 1982 10,582 717 h56 1,173 - 10 582 1983 9,865 7T2 420 '1,162 - 9,865 1984 9,125 772 382 1,154 - 9,124, 1985 8,352 797 31h2 1,139 - 8,352 1986 7,556 827 300 1,127 - 7,556 1987 6,730 862 256 1,118 - 6,730 1988 5,898 897 209 1,106 - 5,868 1989 h,971 937 160 1,097 - h,971 1990 4.,036 672 119 791 - 4,036 Note: Inc'Ludes service on all debt listed in Table 1 prepared Jan1ua ry .9 70. -Table 4.d: PARAGUAY - ESTflVJED FUTURE SERVICE PAYMENTS ON REPORTED ADDITION5 BY SECTOR, TO EXTERNAL PUBLIC DEBT CONTRACTE JANUARY 1-DECEMBER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 2 DEBT OUTST ULbT OU1ST CBE(GIN OF PERIOD) PAYMENTS DURING PERIOD (HEuiIN UF PE.RIOD) INCLUDING AMORTI- DISBURSE- NET OF YEAR UNU)ISBURSED ZATION INTEREST TOTAL MENTS UNOISBURSED CENTRAL GO ERfIIENT 1970 - - - - 100 1971 11$755 208 208 7,995 100 1972 11,755 ,458 458 2P270 8,U95 1973 II#7S5 5 527 527 1*390 10,365 19(4 11'755 205 538 743 11,755 1975 11s550 245 523 769 -11550 1976 11,305 296 506 802 - 11,305 1977 11,009 306 488 79L - 11JU009 1978 10,703 326 468 794 - 10,703 1979 10*377 346 448 794 10,377 1980 10.031 435 446 881 - 10JU31 1981 9,596 524 441 964 _ 9,596 1982 9JO72 549 411 960 - 9J072 1963 8J523 574 380 954 - 8,523 1984 7J950 604 347 951 * 7,950 1965 7J346 629 312 941 -7346 1986 6J717 659 275 934 6,717 1987 6,059 694 236 930 * 6,059 1988 5P365 729 194 923 * 5,365 1969 4*636 769 150 919 4,636 1990 3,868 504 114 617 3,868 Table 4.5: PARAGUAY - ESTI,1ATED FUTURE SERVICE PAYMNTS ON REPORTED ADDITIONS, BY SECTC, TO EX'VYETiAl PUBTIC DEBT CONTRACTED JANUARY I-DECIIBER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Paze 3 DEBT OuTST DEBT OUTST (BEGIN OF PERIOD) PAYM4ENTS DURING PERIOU (BEGIN UF PERIOD) INCLUDING AMOHTI" DISBURSE- NET OF YEAR UNDISlURSED ZATION INTEREST TOTAL MENTS UNUISj3URSED CENTRAL GOVERNOMENT LOANS FROM INTERNATIONAL ORGANIZATIONS IBRD 1970 - - 100 - 1971 6*000 ' 169 169 4,640 100 1972 6eO00 369 369 1.070 4,740 1973 6.000 ' 413 413 190 5,810 1974 6.000 205 413 618 _ 6.uQO 1975 5,795 215 398 613 ' 5.795 1976 5,580 235 382 617 - 5.580 19t7 5.345 245 366 611 -5,345 1978 5 100 265 348 613 5.*100 1979 4&835 285 328 613 4,835 1980 40550 305 308 613 - 4,550 1981 4.245 325 286 611 4.P245 1982 3.920 350 262 612 - 3,920 1983 3#570 375 237 612 ' 3.570 1984 3J195 405 209 614 - 3.195 1985 2,790 430 180 610 2 2p790 1986 2.,360 460 149 609 _ 2,360 1987 1,900 495 116 611 - 1,900 1988 1.405 530 80 610 - 1J405 1989 875 570 41 611 6 875 1990 305 305 11 316 - 305 TaGle 4. d: PARAGUAY - ESTfl4ATED FUT7JRE SERVICE PAWY3TS ON REPORPTED ADD T.lONS, BY SEC ToR, TO EXTEMZAL PTIBLIC DEBT CONTRACTED JANUARY 1-DECEIBER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Paae 4 DEBT OUTST DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DURING PERIOD (BEGIN OF PERIOD) INCLUDING AMURTI- DISBURSE- NET OF YEAR UNDISBURSED ZATION INTEREST TUTAL MENTS UNUISURSED CENTRAL GOVERIMENT LOANS FROM GOVERNENTS UNITED STATES 1970 - _ 1971 5,755 ' 39 39 3,355 1972 5,755 - 89 69 1'200 3S355 1913 5,755 - 113 113 1I200 4,555 1974 5.755 125 125 - 5,755 1915 5J,755 30 125 156 5.a755 1976 5.725 61 124 185 5J725 1977 5,664 61 122 183 _ 5,664 1978 5.6U3 61 121 182 - 5,603 1979 5P542 61 119 180 5 S)542 1980 5.481 13U 139 268 5;481 1961 5J351 199 155 354 - 5P351 1982 5,152 199 149 348 5.' 152 1963 4J953 199 143 342 - 4,953 1984 4.755 199 138 336 4J,755 1985 4,556 199 132 331 4.556 1986 4.357 199 126 325 - 4.357 1987 4 159 199 120 319 w 4, 59 1968 3P960 199 115 313 3,960 1989 3.v761 199 109 308 3,161 199() 3J563 199 103 302 ° 3.563 Table 4.b: PARAGUAY - ESTfIATED FUTURE SERVICE PAYMEITS ON REPORTED ADDITIONS, 'BY SECTOR, TO EXTE?JJAL PUBLIC DEBT CONTRACTED JANUARY l-DECMBER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 5 DEBT OUTST DEBT OUTST (BEGIN OF PERIOD) PAYMENTS DORING PERIOD (BEGIN OF PERIOD) INCLUDING AMORTIl DISBURSE- NET OF YEAR UNDISBURSED ZATION INTEREST TOTAL MENTS UNDIS3URSED NATIONAL DEVELOPI4ENT BANK FINANCIAL INSTITUTIONS 1970 - - 1971 280 - 140 1972 280 80 - 80 140 140 1973 20O 80 80 2 200 1974 120 80 - 80 - 120 1975 40 40 40 - 40 PUBLIC ENTITIES - SUPPLRS 1970 q 14 ' 14 115 - 1971 216 27 7 34 115 101 1972 189 27 11 38 - 189 1973 162 27 9 36 . 162 1974 135 ?7 8 35 ' 135 1975 108 27 6 33 - 108 1976 81 27 4 32 . B1 1977 54 27 3 30 - 54 1978 27 27 28 - 27 Table 4. 0: PARAGUAY - ESTfliATED FUTURE SERVICE PATMENTS ON REPORTED ADDITIONS, BY SEC TD, TO EXTETi;AL PUB3LIC DEBT CONTRACTED JANUARY 1-DECE4BER 31, 1970 Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 6 DEBT 0UTST EBT OUTST (BEGIN OF PLRIOD) PAYM2NTS DURING PERIOD (BEGIN UF PERIOD) INCLUDING AMORTI- DISBURSE- NET OF YEA R UNDISBUDSED ZATIliN INTEREST TOTAI _ ME NTS UtNIS RiRSFD PRIGATE WITH ?UBLIC GUARAirTEE LOAN3 FRCM GOVERN-YEN'TS UNITED STATES 1970 - - , 1971 2,600 - 52 52 1,000 0 1972 2,6U0 - 52 52 1,0CO 1,000 1913 2,6U0 - 52 52 600 2p L0O 1914 2,600 - 52 52 2 2,O00 1975 2,6UO 84 65 1h9 - 2'600 1916 2,516 16b 75 2h3 - 2'>16 1977 2, 348 168 70 238 - 2 348 1978 2, 161 16b 65 233 - 2'181 1919 2,013 168 61 228 * 2'u13 1980 1,845 16b 55 223 - I'845 1981 1,bT( 16 50 218 1,677 1982 1,510 16b L5 213 - 1510 19L3 1,342 168 a0 208 - 1,342 1984 1,1(4 168 35 203 -1J174 1985 1,006 168 30 198 _ 1'U06 19d6 839 168 25 193 -839 1987 6(1 16d 20 188 . 671 1968 503 168 15 183 503 19b9 335 168 10 178 - 335 199( 168 168 5 173 - 168 Statistical Services Division Economics Departmnent Table 4.9: PARAGUAY - PAST TPAiSAGTZ3i'S O;N E:ZIiAL PUBLIC ZBT 1960- 969/l Dablt Fapayable in Foreign Currency (In thousands of U.S. dollars) Page I of 9 bt outstanding i ransactions during period egix nin g oi' eriod _ _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ _ IncTh&ng Disbursed Unciis- Alwhor- Lisburse- Pey,v,ents Year unLAis. only bursed ization merint Amort. Interest Total )4'' TO!T&L I q. 26 32 .263-6 ':S" ,3 14129 25$? 99,2 3493 1967 7534Le 3j/. 2 C.,: 181.34 3273 1?26 45n 1$3 G, 2 4 5 3 5 3, .3^s 92 t7Q334 4681. 1554 6435 ,9hn 92333, frHr3^fi 2&1n25r 316 3 1963 4 7 211 3 67921 1970f) 1 20146 51. 7 o 3;13 L'7 P'RJ i.'ATEL' 'F:tFl ' ! ET 1 9655 6 8 3724 31r 1 1r|/v,3 3'4o 2 234 1 9 152P¶5 5 2 297 i 47/ ;213 1.5 196? 165~5;j'- 1W I):,) 6 ,4 , !A75 4 2z' 1 457 378 1335 -9? 8 ? 1 5;.5 , .1 4 er 39 9 7rQ) 7 ?6,7, 2;, 7 1969 1992n 1 734A '2,17A 5 8fa 5157 1684 3O5 2q-J7 9 19 7 T 23711. 21Z!71 2244 Sec footnote at end of table. Table 4;9: PARAGUAY - PAST TRANSACTIONS ON EXERtAL PUBLIC DBT 1965-1969/l (cO.3T.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 2 of 9 Debt outstanding *Xransactions during period bea in ning _of _ieriod _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ LIcluding 'Disbursed Undis- Author- Disburse- Payments Year undis. only bursed ization ment Amort. Interest Tqtal 7-IR IsA I VLY PEL.; )7ikT S13PPLIERS 1965 5212 2 '50 3161 1 .) a 0 3 354fl 1193 1i 1 12R4 '?tt, 14572 I.47 , 899 2n3 110 3 1967 1397? 7922 61k 4 P75 4124 1%51 229 12PA 19685 193S' V .9,ˇ5 '3399 7J 7n37 995 22F 1224 1969 191rf6 17r28 2t7rC 51 8 5n57 1347 367 1714 19 7X r) 23223 2 8 2.24 FIINANIiAL INSTITiuTInl~JS 1(<5 1 212Tii 12^0 a ! 75* 77- 1966 450 4595 2 15') 21 e 13'4 19S7 2/450 2a5q 251 145 39; 1958 2, ,10 22- , 138- 53 1433 1 9(9 #2() 21 ( a a 337 5 365 197C' 483 4 '3 See footno-ue at end of table. Table 4.9: PARAGUAY - P TRANSPLCTIONS ON EXTEBAL PUBLIC DEBT 196-1969/1 (COm7.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 3 of 9 Debt outstanding Trransactions during period bei - ogdo_ _ _ _ _ _ _ _ Including Disbursed Undis- Author- Disburse- Payments Year undis. only bursed ization ment Amort. Interast Total ?rsIv4rELY i EL.t 3D T PR1',,ATELY-r!ACEn. mO\ 1955 474 . '7i - 162 22 1 3 4 196( ; 312 3!2 - - 1641 178 1967 1418 -.4 ; 4 152 1968 . i 9 6 9 wr 1969 - u a . _ _i 197:) o - LOANS FROM I7TERNATIONAL ORGANIZATIONS 1$965 17,7 C) 22'7 1h?53 275; 2789 253 119 377 1966 19992 2477F, 1 ! 9O0 3';8 26 1 1 6 41 & 0967 2'9332 82 :Ai2'2 47 2 7 7 259 "'4, 1 9 o 8 7 4 15415 1D 359 fiO ,3 53 357 3>7 664 19 6 9 31'4i6 2191 951 6 60 0 64' 6 515 44 i 979 1975 39,So1 27811 See footnote at end of table. Table 4.5r: PARAGUAY - PAST TRAINSACTIOU'S ON EXEIP.AL PUBLIC DEBT1965-1969/1 (CONT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 1; of 9 Debt outstanding Traasactioris during period beginning of period Including Disbursed Undis- AutChor- Disburse- ?ay2rents Year undis. only bursed ization ment Amort . Interest Total LOATiZ FROM IERNATIO1IAL ORGANIZATIOi\7 BRD 1965 2200 - 220r' 275' - a 1 966 4 s9 5 :- 4 9 5 tn2 1 0 11 !t 1967 70 5 ) 1'V4 6946 9 4 16 lf 9, -i 7 ,l 5, zJ71)x! 5i 7 1 PI 41 4 r 41 l1 9 969 7':i5; 242' if ;22 430 ') 2 )11 I 155 155 1970 1135,0 4929 6421 IDA 1955 523 91c70 - 24?? 9 Q 1956 QtDn 2 6751i 750A 9 - 2 25 t967 171 7 I773 9 1I.36 1 - 5693 - 59? 5 1968 171J00 11432 56 6. * 4i 0 4 -3 9 3 1969 171n) 15626 1r7 § Q4 9 7? r 1970 2 14 0') 1 51554 r r4 A See footnote at end of table. Table 4.9: PARAGUAY - ?AST TRANSACTIO.NS ON EXERNAL PUBLIC DEBT 1965-1969/1 (CONT.) Debt Repayable in Foreign Currency (In thousAnds of U.S. dollars) Page 5 of 9 Debt, outstanding Transact-ions during period beginning-of E2riod _ _ _ _ _ _ _ _ _ __ _ _ _ _ _ _ _ _ _ Including Disbursed Undis- Author- Dis urse- Payvments Year undis, only bursed ization mrent Amrort. Interest Total LOANTS FROM I1\NTERNATIO NAL ORGANIZAT I0 S IDB 1965 177*) 9 7; 9 3Q81 Dtt 4 750, ' 1 iV ','O66 5411-2 192 351<,4 w ,' e ' 37A 96 7 5 1 eR 4 9 3 ti 3 2 9 iA5 17ur 2 3 9 5 z66 2 4 3273 3351 1no f 94 35'7 74 53i 1 9'6Q 7266 3556 34 ? 29S7 5i9 2 7 75? 197)' 6751 23 2 4 23 I ]J NIS, r1 'E: N: NENTS 1 &5 2 6 ) 0 1 . 7 1 ) ;'9 ( 1 ;7 ;96 266A77 1A3 'S I3u71 3 h 3 A7 n535 997 2B>¢,S2 0272 971 12's 2544 6"I 6 243 7 9 39 ?, ) iM 9 2 3k *3 : 5 l 2 ° 1 ! f4 4 2I1 2: 9 5 3 r, 9? ) -9?3 4 1 79 2623. 441 79 3 5159 ;55I 3''55 iQ7') 56547 321 29 24417 See footnote at end of table. Table 4.9: PARAGUAY - PAST TRANSACTIONS ON EXTERNAL PUBLIC DENT 1965-1969/1 (Corn.) Debt Repayable in Foreign Currency (in thousands of U.S. dollars) Page 6 of 9 Debt outstanding Transactions during period beginning of period Lncluding Disbursed Undis- Author- Disburse- Payments Year undis. only bursed ization ment Amort. Interest Total !A4 S F i '?!E! ENT S CANADA 1965 j ?P 6 67, 1 9 7 7 t, - , 1963 74V) 74.' 411 S9 1969 7t A 3I1 32n i. 5 2o 1979 740 596 i44 C C '5lS Ll ,!) V I 1 jt)3 23 53 15 15 13 13 1966 25 i - ?.67 115 1 U 12 1 13 | 9~ c )3 3n i 9 ,7'1 3 3 - See footnote at end of table. Table 4.9: PARAGUAY - PAST TRja,SACTIONS 01 .3YTERNAL PUBLIC DEBT 1965---969/1 (CONT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) Page 7 of 9 Debt outstanding *rransactions during period beginr'drg of period L-cludcL.- Disbursed Undis- Author- Disburse- Paywenats T.ar dunzis. only bursed ization ment Amort. Interest Total I PAN S r I i 'E' I TTS GERBYANY 5 ~ ~~~~ 3; j ,, 3 O o, ,l. ) 1 9 >~ 3.OO2995 1 . 7 f 1 Q 2 -! ? n i 89 ' 67b 2973 1.8 9 I i 6 3`27 895 t26 134 L6 1 ':6' *573 o577 ,394 69? 275 l4 43 9 1969) 55 9 3X)2 259'( 5 1) 627 353 1,57 511 1970 1130-2 3760 7722 JAPAN 9i9 5 255 ,, ' 517 i±S 663 19f26 2:167 517 , '; 623 .) :7 I 5 15:) - _ w ri 17 73 50 l 9>) iER 1 33 1; 33 . - 53: i7 566 19b3 1497 4 ;'9 4 - -- .' 14 5 ) 1971 - See footnote at end of table. Table 4.9: PAPAGUAY PAST TRANMSACTIODS Obl EXTRIR L PUBLIC DEBT 1965-1969/1 (CONT.) Debt Repayable in Foreign Currency (In thousands of U.S. dollars) D)ebt outstanding Transactions during period beginning of _priod in;cluding Disbursed Undif Author- Disburse- Payments Year u-dis. only bursed ization ment Amort. Interest Total SXq r¼n l Gi ER ilE..4TS UW-ITED STATES 1 9 65 l5 IQ2 1 t 7 ,45 67- 34" 3 r2 T724 1966 15 5o 1?223 33k7 277 3 2w 264 364 626 1 9; 6 7 l 7PR, 3 I 5 22 P! 2 f 39S 93 79 1 4 ? fi64 3 7 1 4 6 1968 96i92 15623 1 s9Ceia 2q1 4 2<;63 541 410 i022 1969 28964 17749 11215 12383 7:/ 7 677 512 1189 197) 64Q 69 2'41 18 1.6551 OTHERS 1 0Si 41-11 I 1 66 3245 1 3 1 1 314 6 1956 9 37 5 t ,2 I967 5942 4 57 1 4 39 2 3 1968 3M7 '5)76 571 a 27. 768 21 5 1033 i 96t) 9 4379 4579 3a " 3 O V) 33 462 1495 197q' 3i333 V3i33 See footnote at end of table. Table 4.9: PARAGUAY - PAST TRANSACTIONS ON EXTERNAL PUBLIC DEBT 1965-1969/1 (CNOT.) Debt Repayable in Foreign Currency (In th.ousands of U.S. dollars) Page 9 of 9 Debt outstanding Transactions during period beginning of period Includi-g Disbursed Undis- Author- Disburse- Payments Year undis. only bursed ization nent Amort. Interest Total 1.1. - , 1~ t, ti,' 17NA -I T rU~ 1965 43)..+- a 1'3t 9i66 9 C?C !k 5.,? 1 9/'7 4h2 4-j - 7-l 1 9'^~ 8 336 336 - 2 - ?4 1969 312 3 ? 74 ?4 1970 288 2% - /1 Debt with an original or extended, maturity of over one year. Note: Imbalance due to revaluation of Deutsche mark. Statistical Services Division Economics Department -eo° 8 30 aoa 8 c 2 g 9 . F 2 V | 88~2 ° SF a C 'H -. 5 X ; , w e 0 3= e . s g & ~ ~ ~ ~ ~ ~ F~ j. H~~~~~~~8, & 822°t *~~~ Bex ww~v a 2 n22~ F 32v [~~~~ t8F e2$ e@ os r 9 v|ovSFFrF~vvS' $0 r 8 t .,a £ " 2v c F g ' c < V - F W 'F t-' F r ~ ,v. coF' 2 f qPsHHW$ O s: F ' - N 2 NF'; cC. F' N O F V l ,VNaEeCBNa 1_CVr a0.F' ~ F .s=;.i ........'o_ ko l.........iiVVlD i w tr 8 r 8 U9¢ - V Nc_zV taQ . O. i+ o0'F~ ~ OQOF'F'ti 2N Fl O O i o a F i ..FF'}i v .i ii NF O o2 CF F -v It 8 e F'e ,F' aF°C e VA V _ y - l= aN C v Wo 9 V N a. _ I I F o 1-w - - N F' 8F - --, , 9j F.F .i Ji F',.rw NCF E: rq F W $WF N OU F'oF$ 8o UF$$$t8t w O -FF V rF -l FW - F'UF'F' $ - NF| zV\No'e08 oHoOr WW tco.o $$_.WOooaaC _'I-O0'FFO e IO VFNF F'IIFO FO0 0 0 * *i V i OiziV ~ V i2i ~ O W ri_i V F .; ' v CW N NH .4 °F'T kV p, 8 g g g g g ,L °; q° F ~ ~ ~ ~ ~ ~ ~ ~ 8 I 0 cI °°jt vi m 9i oNi =. Q$FlO, . cFC' v , $ SO+F, . C4i K ~† *. a I D-VVNe^0O E~~~~~~~ N0 N N $F' e e _ _ .410. FN WF ; 000|**, FFvwjVNW >WWj ot S . £Na iW lov ^_^^^>^^>,~~~~~ , ' rSF o N'atH F-NFF-OHOFF -O'NN o FF F'FIFF w000 o o' HOO FW |||F, F ' F' 0t°'0 ovN x P 0lFOv-N 08r4o HF'~~~~~~~~~~~~~~~~~~~~ 00. ,,t,HO oFN w- a 0 HO. ' FO 00O F t w 'O gv 00 a0 .-F40FcF-F 0000 w ' F ONw,w F-- F- F F 000000 M HC VIV . VVE . 9jD D i-J . v v . oN WW N . .. _x. x / l Table 5.1: SOURCES OF CBITRAL GOVERME2T HRV&wUa (millions of 1969 OT Average Annual 1964s 1969 1970 1976 Ch1e Value 14 Distribution GDP Value % Distribution S GDP Value % Distribution % GDP Value % Distribution % GDP 1 %9 7 C0an7 76-70 1. Income Taxes 447.5 9.9 0.8 747.7 8.8 1.1 841.o 9.4 1.1 1,325.7 10.4 1.3 11.1 7.921 2. Wealth Taxes 267.2 5.8 0.5 4623 594 0.7 6o1.8 6.6 0.8 897.4 7.0 0.9 14.5 6.9- Property 17 T7 ti 6-2'018 . .80 897.3 . .9 1. Corporate Capital - 55.6 90.7 136.2 n.a. 7.0 Inheritance 31.3 32.0 17.8 67.8 7.3 6.0 Vehicle Transfer 8.8 22.3 23.3 33.1 17.8 6.o 3. Cattle Taxes 156.7 3.5 0.3 367.1 4.3 0.5 425.0 9.8 o.6 548.6 4.3 0.5 18.1 4.33/ Substitute Income Tax 37.2 72.3 83.7 Slaughter Tax 44.5 148.6 172.1 Cattle Transfer 75.1 146.2 169.2 h. Import Taxes 2,219.1 48.8 4.1 3.786.8 44-5 5.4 3,399.8 37.5 4.6 4,750.9 37.3 4.5 7.1 6.04/ 5. Export Taxes 304.6 6.7 o.6 241.8 2.8 0.3 273.0 3.1 0.4 300.0 2..4 0.3 -1.8 1.6-/ 6. Excise Taxes 269.o 5.9 0.5 895.6 10.5 1.3 1 004. 2 11.2 1.4 1 637 4 12.9 1.6 n.a. 8.5 UCigarettes 81.2 151.8 T7BS 1726/ Fuels 579.0 649.6 1,156.O 10.1- AAlcohol 87.8 164.8 176.o 278.5 8.0 7. Sales Taxes 22.8 o.5 - 33_.2 39 O 458.0 591 o.6 649.7 5.1 o.6 n.a. 6.07/ 8. Stamp Taxes 288.6 6.4 0.6 885.4 10.4 1,j 989.0 11.1 1.3 1,251.1 9.8 1.2 n.a. 4.0-/ 9. Other Taxes 26.2 o.6 - 53.6 0.6 _ 60.7 0.7 0.1 103.5 0.8 0.1 15.0 9.3 10. Non Tax Revenues 540.0 11.9 1.0 733.0 8.6 1.0 939.5 13.5 1.3 1,270.8 10.0 1.2 9.6 5.2 TOTAL 4,541.7 100.0 8.5 8.508.5 100.0 12.2 8,942.0 100.0 12.2 12,735.6 12.2 12.0 6.1 a/ Historical values deflated on the basis of relationships between revenues and GDP in current Guaranies. 1/ Revenue projection assumes that draft income tax legislation replacing the existing schedular system, which almost excludes personal income from the tax base, with progressive rate taxation of both corporate and personal income is enacted as origirally submitted to the legislature. The projection also assumes continued improvement of tax administration. 2/ Previous gains reflect adjustments in fiscal valuation as well as improved administration. The earnings projection assumes no further property revaluation, although such revaluation is recommended. Tnus the projection depends heavily on continued improvement in tax ad.tnitration. 3/ Revenues are assumed to increase in the future proportionately with the number of cattle sold for slaughter. Rapid increase of these revenues in the past reflects both rate changes and the imposition of a substitute income tax on the transfer of cattle sold for export. 4/ Past changes in import tax revenues reflect the revenue maximizing effect of reduction of rates on imported cigarettes and cigars and changes in the rates of import surcharges as well as exclusion from the tax base of imported petroleum products (see note 6). In the future revenues are expected to increase proportionately with the importation of consumer goods. This excludes the effect of recommoended changes, namely: reduction of duties on alcoholic beverages and other 9L-rctuaries: and limitation of import duty exemptions, especially on vehicles. 5/ Revenue projection assumes that export taxes increase only about 30 percent as rapidlv as commodity expDrts, reflecting the Governnentls intent to reduce these barriers to export expansion. 6/ Past performance reflects the installation of Paraguay's sole petroleun refinery in 1966 and the consequent shift of taxes on petroleum products from the import to the excise tax category. Future performance is assumed to be proportionate with expected increases in the consumption of petroleun products. 7/ Past performance reflects the introduction of a general sales tax in 1969. In the future sales tax revenues are eoxocted to increase proportionatsly with both total internal consumption and consumer goods imports. 8/ Past performance reflects adjustments in 1965 and 1969 of both the structure and rates of the stamp tax. Future porformance is as projected by the Government. Source: Ministry of Finance, Technical Planning Secretariat and staff estimates. Table 5.2t PULIC SECTOR INVESTMENT PROGRAM, 1971-76 (va.lues in millions of 1169 6) A 1971 1072 1073 197I, 1975 1976 A B C A A C A B C A B C A B C A B C Central Goverment 2 .)6l.7 2,4566.0 1,995.2 5,072.5 2,635.6 2,7554.1 5,5135.20 2,933.3 3,255.5 3,159.1 5,051.1 3,317.0 2,055.6 5,509.6 3,667.1 2,866.3 Ministry of Public Works 1,555.8 1,3C7.i ~~~~~~~~~~~~~~~1, 588. 2,727. 1,58. 182.5 3,2.7 1,962.1 2,205.5 2,503.3' 3,228.5 2,322.5 1,157.1 3,52b.7 2,575.0c ,6. Ministry of Education 318.7 306.5 67o.6 325.7 55,1.7. 563.9 260.? 500.3 182.5 108.8 373.0C 182.6, 106.d 55O0.-- 55O0. Ministry of Health - 155.0 - - 17)!. - - i8i.6 - - 190.8 - - 20cC - Ministry of Agriculture 555.3 5445.3 163.5 5,16.9 516.97 36.9 299.): 29~.5 386~.7 723.5 223.1I 365.9 576.3 576.3 503.1 --513.8 Ministry of Defense 25.5 25.5 25.5 - -- - - - . t,.o - - o.o 0 - - Other, 217.) 217.5 217.3 250i.0 2 50.0( ' 25 0.0 1 252.0 251.0' 250.0 250..20.. 250.0 250.0 250.0 250.0 -- 250.0 Public Enteror.ises 3,850.6 2,29P. 3,),62.8 3,50~9.1 2,702.3 2,919.1 2,759.7 2,791.5 2,381..? 2,3'1'3.5 ~ Z2540 1,955., 2,226.7 1jj7l.i 1,12l - 53.6 Ce.ent Plant 210.0 210.0 210.0 - - - - ------- --- Electricity Adiminitration 2,036.8 1,235.3 2,037.0 1,565.0 1,253. 1 1,5h85.0 1,307.6 1,319.6 1,307.5 1,522., 1,063,.0 1,160o.0 1,527.0 777.5 671.5 - 52. 0 Ports and Navigation 173.6 79.0 177.6 63.8 6i.8 61.8 21.0 15.q 28.0C 30.1 33.1 8.0 73.0 72.0 8.0 --8.0 Merchant Marine 90.3 36.3 19.5, 92.3 36.3 19.5, 91.0 36.3. 12.5, 36.2, 38.0U 19.. 38.0 C 386.0 19.5 L 19.4 Railaay 10.C - 20.0 11.2 - 20.0 10.2 - 20.0 10).6 20.0 10.2 20.0 - 20.0 Airlines 35.0 35.0 35.0 33.5 33.5 33.5 --.-. - - - - - - Teleco,,omnicationm Administration 565.5 185.0 770.0 806.8 395.1 510.0 65c.0 365.2 615.5 222.0 170.0 397.0 - 120.0- --- Water and Sevge Administration 565.3 255.1 5o 0. 0 781.0 693.9 650.7 V5053 765.1 217.0 251.5 385.5 - 135.1 167.3- --- Alcohol Plant 75.0 25.0, 25.0 30.0 30.0 31(-.0C 35.0 35.0 30.2 15.0 1 55.0 L 55.c) 60.0 60.0 ioo 5.o - Other 239.2 239.2 178.8 20B.7 2),2. 2 218.2 250.85 250.6 155.3 285.8 285.6 285.5 365,.3 3 65t.3 365.3 --365.2 Welfare Agencies 521.54 758.5 531.5 830.7 710.5 517.31 859.3 521 586.6 1,290.5 561.3 563.6 1,216.6 75i.6 661.1 ____ -635.9 National Bnioersity 11:0.0 70.5 70.5 35.? 70.5 70.5 255.2 - 227.6 - - 113.0 - --- Social Security Icstittciion 153.5 I 126.0 126.0 120o.2 203.1 103.0 11 6.5 96.1 96 19.2 - - 19.8 - - -- Housing and Uriani-ation - 285.0 - 376.8 785.0 - 376.8 285.0 37 7. 5,0, 2.0 265.0 377.0 376.3 322.3 522.0 --377.0 Aftosa Caconaign 119.0 170.0 119.0. 1":.), 37.7 75] 53.3, 171. 2 53.3, - - - - - - --- RBo. Welfare Institute 39.3 65..5 39.3 30.13 135.8 30.3 - 95.5 - 578.6 95.5 25.2 751,.8 16s5. 0 55.5 --95.5 Other 79.7 92.-5 70.7 65,.i 78.5 65,.1 58.5 75.5, 56.5 163.0 182.6 161.5 165.3 165,.3 163.6 --163.5, flicipalitien 102.5 291. 101.5 115.1 30)~. 115.0 128. 191.0 ~ 1130 19.0 139.3) 139.0 1592 .2 2 ho.? LL2 __ 1592 Total 6,936.2 5,805.9 5 ,99 ~3 .1C 8,527.3 6,95 2.5I 6,7'05.5 6,0182 .0 6,)07.,9 6,3M1.0 6,962.2? 6,761.6 5,9575.5 5,128.3 6,979.7 5,605.5 - ,505.0 Source, A: Eotinatrd from miosion visits to Go,ernoent Ageo,cier - Oecc.tralt-ued wad Public Enterprise 1estitutoocs. B: Plan,ning Secretariat. C: Mission pr-jectimos. (hitoIca 1j IL DLIC dS_IP INVEKWIT 0 e IAo alUjo- ourat A - P-Jieted e-u- - million 1969 8) lOli 1965 1966. 1i?7 196.1 1969 1970 1971 1972 1973 1976 1975 1976 Voice GDlP Value 8rG-D VI 87TV 8p au GD? Se- up TI- Toop -lub GDE VleP 01? 7081--1iThl-P Valoc Io-r Md aue IVP Vau 11 ai I ID? VU" TP __evenues 7,601.0 11.6 9,209.1 16.5 10,236.1. 17.6 17,8'7?1 17.7 12,151.6 18.6 13,661.9 itS5 ili. 5i58 19. 15,568.1 20.0 160-19.1 20.b 18.153.7 20.9 19.385 .8 21.1 20.607.1 20_.0 21. 931.3 21.0 Centra loenec- ,6.1> 8.5 5,789.0 10.1 6,173.0 10.8 6,728.2 1C.0 7,262.0 11.1 .6508.9 17.1 8,31L2.0 11.2 9,1,_ .3. 1?.? 1C0.0).2 12.3 11,661.i 12.3 11,296.8 12.3 11,999.3 12.2 12,735.8 12.2 Decntalze oe2n3. 996.0 1.9 1,075.0 1.? 1,176.0 2.3 1,763.3 2.1 1,702. 7.1 1,092.1 1.8 2,379.8 .;I, 1.2 ,67. 1 1.0 1,539.o 1.1 1,628.3 1.8 1,709.6 1.9 1,297.2 1.8 1,829.8 1.8 fti-copalii-i 6/121.0 0.8 2931.0 0.6 289.0 0.5 72. .5 , . 13m 6 056 6 6 nOi 6 V0 c 16. C, n 586>.7 0.6 58h.8 o.6 602.6 0.6 626.6 0.6 PuolIt Doter a- 'J~~~~~~~~87.Q 3.5 2,o52.9) 31. 2,660.6 1.6 2,5I6 b 310. h8 ,57 L. 717 . ,3. . ,810 7 7. 5 ,317.6 6.1 5,796.6 6.3 6,206.0 6.3 6,579.6 6.3 Curen Locecal 6063.6 12.0 8,025.0 1j..j 8,6. 15.1 ,031.7 11, 6 11,072.1 I1A 11,6M. 1_______ Lo 1,632 16. L,656.6 1b.c 15,730.5 12.1 16,593.7 12,9 67.08,0 17.0l Ceta - ocerGs-- 6, 3.1 6. 8,168. 9.2 6,271.0 3.0 ,68.60 1 iT.I 1 >6 1> . 73 0 1775 7 7,56661 0 7 203 10 ,861.0 20.2 9,512.6 1V.3 1V,i9a.l 10,1 10,968.2 12.6 Deeorluc Oetoso6. 1.7 906.0 1.0 1Ol. 1.7 I,0)2~ 07 I 1I 1 516605 1 4 1,633.6 1,2 1,716.8 1.9 1,799.1 1.8 1,879.8 0.8 MuolcapalltOet ito.0 0.3 1c~~~~~~~~ ~~65.u 0. 3 230.0 0.6 2io > ' I ''' . 6 8. 0 I 1I5.1 D. I 372.6 0.6 101.9 0.L 627.3 7.6 660.0 0. Public Edlerypri-e 1,559.0 3.6 1,832.6 3.3 2,362.0 h.0 C 1 .1 3h 15~d Lo 1 3.- h " , 3115. I , > ,37 6>963.0.1 6.1 6,102.3 6.1 6,169.3 6.3 6,619.5 6.2 Current Ancouc Gurclo 738.0 1.6~ 1, 161. 0 2.7 1,367.0 9.3 118~. 5 3. F 2> 69. , 17-3 6. 688n3 60 601i.6' 61 616 6 Ceotra G-c--rc 21 0. '21. 021 T'I08 lcnctailedAgecIs 11. 0. 18.0 0, 16.0 01 67 1 11 '26 0' 6 2 ti05 21 7IF 18 1,7rm 51 9 ,-.1 I Ag-di, l2b. 0.2 75.0 03 168. 0.3 27, 0 O 01i. C9 016-6, - -2.3 - -6.9 . 1.9 . - locicipeliGues ~~~~~~ ~~~107.0 0.2 160.0 0.2 89.0 0.1 288 1 01 -3c O, 1CDO' 10b181.2 2 172.1 0. 2 1e4.1 1.2 13.3.3 0.2 186.6 6.2 Public Eteterprie.. 268.0 0.8 222.5 0.1, 238.0 0.1, ~ . ~ , Q ~ . ,.F i? 1LO . ,3. . 2,523.4 1.7 1,692,3 1.8 2,038.7 2.1 2,189.9 2.1 CacIta Id.~ 31.0 0-1 73.0 0.1 100.0 0.2 102.C 0.2 1x -C0.'011. 0.0 tO`o I. IY>.o 01 806.0 V.6 1124. 6.1 1C6.0 6.1 Ftoen Icet- ot1,259O 2.5 1,808.0 2.7 2,651.0 6.6 1,326 .06 2186 0. Z75__ --7 993-.0 _7. 6,0. 0.6 0 36,17 0 7. 5 ,97-.8 5.7 06080L ectral Gzoernen& 609. 0 1.2 4698.0 0.9 796. 1TI 1 7 07 12 1 8- 391.2 Y.92,o 2,561 I 58 3.1 3070 3.6 1583 3.7 2t53 7~ iVctole gen-c 269.0 0.8 363,0 5.6 359.0 6.6 270 .L 2P .L 13 0- q7. C , 1,.9 u.. 617.3 70.6 586.8 0.7 56o.6 0.6 660.1 0.7 638.9 0.6 Eacuipaltma9.0 0.2 92.0 5.9 96.0 0., 53 2 022 1 11.9 . 115.6 0. 127.0 01 139.0 82 692 01 1.. . PulI. otrrlc 3902.2 0.6 568.0 1.6 1,6,02.0 2.3 2,3w. ' 17,66. I 2.0 1,1-1. . 3,66.0 6.9 2,919.1 3.6 2,381.3 2.3 0,88695 2.1 1,128.1 1.1 857.6 o. 8 Capitl. Tra-e-eo- 360.0 0.6 309.0 0.6 376.0 1.6 57C G., 1 1, ~ 118 6h. . >9.1 0.9 606,0 9. 806.O0 5. 802.0 2o 802.0 01 8052.0 2±-2 Ca>h DefIcit and Fuooc 788.0 1.6 621.0 1,1 1,858.2 2. 6 2.99& h 3,2. 37>r->ol, > 7 I,. 3,C7,. 3.8 >203.7 3.8 2,719.2 2.9 1777.1 2.0 788.6 1.7 Daenl nt8 297 .2 0.61 102.9 91.3 1,199.11 2 .1 2,21 1676-1. 0.2 ,7rJ> 3 .5 3,160.6 3.9 3,615.3 i,.2 2, 112.3 2.3 6,861.6 1.6 987.3 C. a. Amortization 6-251.0) ~~~~~~~~ ~ ~~(-366.0) (.361.0,) (-5718', >-52" > 30 )6 6.).6177 (-936.) (-1,6 1636 (-1,203.1) 6-1,132.1) 8. Ouehuroee,coto ~~~~~~~(1>68.0) (528.0) (,660)(',2,0-z> I0 1 ~2-(1nr110 (621.)7.076 3,269 62,76.76 62,120.05 Ictorrul ~~~~~~ ~~~~ ~~~601.0 1.2 >3>.0 6.7 363.0 0.6 73 6o- 6 .90. -0.1 -31. -o.6 607.9 0.6 638 0.6 -187 0. 02?D 5!33L IC' 10. 0 55,812.1 102.0 7880.0M 100.0 62 2'7, Ice2. 60 220. 0 102 0, - ___C 1~, lo 7768~ 12.2 a42 0. 6,869.6 100.1 92,0589 1)0.0 58 061.1 106.0 108,I19,C 1C02,0 I/ Idlond-e Vioti-is of Ptbluo Work, Agut~-lclir ad Lze--ck, Education ond Cultur, Co~f--e and Publo> H-el 1/ Ioludde.- r-Ia-Soial Securot l-etltut, H8oi,>n a-d Urtbnu-aua Tnot1itot, lurol VolIf-e Inotutute. te-l ->tcou fbn o,d the Na>, loca Aftoz erie I/ londe.- antcaia. GuNttiral C ea-n- Izeu.try, Nletucal El-lotioty dOAiitratl-e, Nati-cl pF-t nod to' ot,ou,e,1ocaTn ,>oc9>b-tnli>cc> Curlos A. cOd 9Iay, P->eguyucOr>e,Ntou Tioeecot n Ad,nli-htaiz, Gait-oy lokek Cu...e.ation and tDe Para.guay A100601 Adenei-trti-c /Futur pro3-to- aae-r funda -epe-d to NatIna Deemlepoet 80 -retratd a- capital tranfer.- 2/Futurd rjeto eacidde Plan Truungula tue project a.uId haz aappr...ia,ucly -cutr1 finL-ol effert eloc-, II ue,>onto>thor Yuc-ety Vf punboclr6 oW,, o o, euurn.5 be rc-cn ucd or -aoreoe... i--eed c- order to o e-te for tie local eeeourIdeahl0 -uuld t'e pre-epted by thie proJect. 6/ -I.nldee anritocad dilurbe- et of Ozurei 1zau by eoeoa-gnne Sorr principal 1--,ae,l e10z. h '2R ur.,eproni-aclo e Ia izor-icob IC? G--ul ocreece .. t,>c -i,>, y-,c>po.rt to03 are likely to he reaircd by thi5 ageuy foe tonperatio..aIo-te lcPae-uy. .fbiproj3etiono f .. .--1f-dIg.- t. r -yf: CL8,c s 1 , .I~ lnuorpu blu Ieor Inoceteet Table 5.-4: PUBLIC SECTOR INVESTNIENTS BY SECTORS, 1964-69 (in millions of current Guaranies) 1964 1965 1966 1967 1968 1969 Agriculture 38.1 29.8 25.5 13.7 17.6 75.LI Energy 90.9 285.3 1,142.8 1,964.0 1,595.8 258.7 Transport and Communications 691.5 628.4 9)46.6 1,854.1 1,649.6 1,983.2 Education 53.2 52.8 42.6 33.2 47.3 56.1 Health 44.6 35.0 296.8 251.6 241.1 230.2 Housing - 0.3 6.3 2.1 7.4 150.0 Othersi/ 340.9 473.3 190.7 205.1 866.2 412.8 TOTAL 1,259.6 1,504.9 2,651.3 4,323.8 4,429.0 3,166.4 g/ Includes industry, municipalities, general services and other non-project investments. Source: Planning Secretariat. Table 5.5: PUBLIC SECTOR INVESTIENTS BY SECTORS, 1970-76 (in millions of 1969 Guaranies) 1970 ]971 1972 1973 1974 1975 1976 Agriculture 76.0 322.0 470.6 438.0 390.0 198.5 609.5 Energy 330.5 2,037.0 1,4185.0 1,307.5 1,180.0 671.5 112.o Transport and Comiunications 1,013.5 2,100.0 2,367.0 2,878.5 2,767.0 2,521.5 1,610.0 Fucation 101.4 70.5 515.0 105.5 379.5 51o.o 50o.o Health 286.5 6i6.o 753.5 315.0 - - - Housing lo0.o - - 377.0 377.0 102.0 377.0 Others 1/ 841.6 847.5 614.5 619.5 881.0 972.0 926.5 TOTAL 2,753.5 5,993.0 6,205.5 6,341.0 5,974.5 5,605.5 4,505.0 1/ Includes industry, municipalities, general services and other non-project investments. Source: Mission estimates and projections. Table 5.6: PUBLIC FIXED ITIESTMENTS BY SECTORS, 1964-76 (Percent Distribution) 1964/65 1966/67 1968 1969 1970 1971 1972 1973 1974 1975 1976 Agriculture 2.5 0.6 O.h 2.4 2.8 5.4 7.6 6.9 6.5 8.9 13.5 Energy 13.6 44,5 36.1 8.2 12.0 3h.0 23.9 20.6 19.8 12.0 9.8 Transport and Cormrunications 47.8 40.2 37.2 62.6 36.8 35.0 38.1 45.4 46.3 45.0 35.7 Education 3.8 1.0 1.1 1.8 3.6 1.2 8.3 6.L 6.4 9.6 12.0 Health 2.9 7.9 5.4 7.3 io.o 10.3 12.1 5.o - - - Housing - - 0.2 4.7 3.8 - - 5.9 6.3 7.2 8.4 Others'/ 29.5 5.7 19.6 13.0 30.6 14.1 9.9 9.8 14.7 17.3 20.6 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 100.0 1/ Includes industry, municipalities, general services and other non-project investmxents. Source: Tables 5.4and 5.6. Table 5. 7: ROAD USER CHARGES AND EXPENDITURES ON HiIGIE-IAYS (millicns of current #) 1964 1965 1966 1967 1968 196', 1(.-70 ROAD USER CHAFRGES Petroleum Product Taxes 179.1 197.8 314.5 455.2 552.0 728.1 737.5 Vehicle Transfer Taxes 8.4 11.3 12.0 10.4 23.0 22.3 27.2 Registration - - 13.8 15.2 16.7 19.5 21.9 Tolls 14.8 28.0 36.4 37.4 47.3 55.1 6o.6 Sub-total 202.3 237.1 376.7 518.2 639.0 825.3 847.2 Import Duties 262.2 428.4 764.7 725.3 636.5 794.4 80,)1j.7 TOTAL 464.5 665.5 1,141.4 1,243.5 1,275.5 1,619.7 1,651.9 EXPENDITURES ON HIGHWAYS& Construction 185.1 236.7 417.7 504.7 733.7 723.2 245.1 Maintenance 51.1 152.5 165.2 200.0 155.4 87.7 588.9 Andministration and Overhead 19.8 22.7 24.8 22.8 20.4 23.5 26.8 TOTAL 257.0 411.9 607.7 727.5 909.5 83)4.1 860.8 j Including import charges on vehicles, parts, tires, etc. v/ Including expenditures of Direcci6n General de Vialidad, Juntas Viales and Comando de Ingenierla. Source: Minister. de Obras Publicas y Comunicaciones; Secretarla Tecnica de Table 6.1: SUMMARY ACCOUNTS OF THE CENTRAL BANK, 1564-70 (in millions of current J) E N D OF Y E A R JULY 31 1964 1965 1966 1967 1968 1969 1970 1969 1970 A. Net Foreign Reserves 344 1_266 1,400 1,377 1,306 1,127 2.O4W 846 1,826 1. Assets 772 1,468 1,534 1,555 1,570 1,327 1,286 2,05h 2. Liabilities -428 -202 -134 -177 -264 200 44o 228 B. Net Domestic Credit 3,759 3,666 3,805 4,386 5,134 5,565 5,695 5,431 5,358 1. Central Government 1,672 1,763 1,630 1,776 1,963 2,013 ) 1,915 1,671 a. Credit (2,130) (2,289) (2,393) (2,773) (2,845) (2,751) ) (3,051) (2,666) b. PL-480 Deposits (_) (_) (-95) (-284) (-210) (-689) 4,165 (-949) (-882) c. Other Deposits (-458) (-526) (-668) (-713) (-672) (-49) ) (-187) (-113) 2. Other Public Sector 1,220 1,219 1,289 1,624 1,960 2,152 2,035 2,338 a. Wheat Commission (net) (372) (370) (353) (435) (475) (466) (551) (536) b. Other (net) (848) (849) (936) (1,189) (1,485) (1,686) (1,484) (1,802) 3. Banks 202 116 127 160 118 395 700 312 507 4. Private Sector 140 227 299 310 320 295 280 322 282 5. Claims on Private Sector Taken Over From Ex-Bank of Paraguay 1,334 1,277 1,234 1,183 1,134 1,076 1,030 1,103 1,031 a. Agriculture (474) (454) (439) (421) (403) (383) (392) (367) b. Livestock (113) (108) (104) (100) (96) (91) (93) (87) c. Industry (394) (377) (365) (350) (335) (318) (326) (30h) d. Commerce (79) (76) (73) (70) (67) (64) (66) (61) e. Construction (55) (53) (51) (49) (47) (45) (46) (43) f. Other (219) (210) (203) (194) (186) (176) (181) 169 6. Miscellaneous -809 -935 -775 -668 -361 -366 -480 -256 -471 a. U.S. Government Deposits (-838) (-911) (-657) (-560) (-426) (-517) (-438) (-472) b. International Agency Deposits (-298) (-407) (-489) (-594) (-484) (-356) (-393) (-374) c. Advance Impcrt Deposits (-351) (-392) (-450) (-408) (-485) (-481) (-450) (-416) d. Capital and Surplus (-39) (-40) (-42) (-42) (-46) (-49) (-52) (-55) e. Claims on ex-Bank of Paraguay (641) (739) (809) (892) (989) (1,054) (1,014) (1,103) f. Other (76) (76) (54) (441) (91) (-18) (63) (-257) C. Liabilities to Banks 1,479 2,007 2,302 2,714 3,171 3,237 3,893 3,124 3,762 a. Vault Cash 150 214 252 187 278 259 288 276 285 b. Deposits 1,329 1,792 2,049 2,528 2,893 2,978 3,605 2,848 3,477 D. Currency in Circulation 2,624 2,925 2,903 3,049 3,269 3,455 3,846 3,153 3,422 Source: Central Bank of Paraguay and Staff estimates. Table 6.2: SUMMARY ACCOUNTS OF THE NATIONAL DEVELOPMENT BANK, 196)-70 (in millions of current 0) E N D OF Y E A R JULY 31 1964 1965 1966 1967 1968 1969 1970 1969 1970 A. Net Foreign Reserves -42 -25 -282 -463 -590 -807 -910 -844 -937 1. Assets 15 48 59 4 31 6 15 12 2. Liabilities -57 -73 -341 -467 -621 -813 -859 -949 B. Claims on Central Bank 211 288 391 519 482 487 579 570 598 1. Vault Cash 51 71 80 62 117 98 160 137 158 2. Deposits 160 217 311 457 365 389 419 433 441 a. Legal Reserves (136) (203) (295) (437) (343) (333) (405) (426) b. Free Reserves (24) (14) (16) (21) (22) (56) (28) (15) C. Net Domestic Credit 768 1,477 2,303 3,211 4,272 5,783 6,686 5,312 6,340 1. Private Sector 1,215 2,033 3,103 4,335 5,342 7,083 8,182 6,615 7,820 a. Agriculture (273) (531) (667) (965) (1,554) (2,804) (2,453) (3,206) b. Livestock (253) (519) (887) (1,375) (1,843) (2,036) (1,949) (2,282) c. Industry (368) (723) (1,177) (1,498) (1,463) (1,670) (1,622) (1,707) d. Commerce (236) (178) (268) (374) (349) (459) (472) (518) e. Forestry (69) (61) (76) (87) (85) (62) (68) (63) f. Other (17) (21) (28) (37) (47) (51) (52) (45) 2. Official Deposits -107 -97 -179 -226 -132 -191 -191 -173 -122 3. Capital and Surplus -746 -879 -1,199 -1,387 -1,527 -1,682 -1,878 -1,645 -1,878 4. Miscellaneous 406 420 578 489 589 573 573 514 520 D. Long-Term Liabilities to Foreign Institutions 375 1,057 1,653 2,344 3,298 4,186 5,057 3,881 4,675 E. Liabilities to Central Bank 149 122 93 136 34 351 368 233 386 F. Liabilities to Private Sector 413 561 666 787 832 927 930 924 941 1. Sight Deposits 273 347 347 387 402 467 465 454 462 2. Time and Savings Deposits 137 214 318 400 431 460 465 470 479 3. Other Deposits 3 - 1 - - - Source: Central Bank of Paraguay and Staff Estimates. Table 6.3: SUMMARY ACCOUNTS, COMMERCIAL BANKS, 1564-70 (in millions of current 0) E N D OF Y E A R JULY 31 1964 1965 1966 1967 1968 1969 1970 1969 1970 A. Net Foreign Reserves -97 -44o -492 -930 -994 -1,046 -1,079 -1,280 -1,191 1. Assets 180 144 146 159 127 348 171 494 2. Liabilities -277 -584 -638 -1,089 -1,121 -1,394 -1,451 -1,685 B. Claims on Central Bank 1,222 1,736 2,179 2,675 2,748 3,314 2,552 3,158 1. Vault Cash 99 143 172 126 161 161 128 139 127 2. Deposits 1,123 1,593 1,731 2,053 2,514 2,587 3,186 2,413 3,031 a. Legal Reserves (1,075) (1,443) (1,675) (2,033) (2,478) (2,579) (2,392) (2,973) b. Free Reserves (48) (150) (56) (21) (36) (8) (21) (58) C. Domestic Credit 2,860 3,314 3,936 4,908 5,571 6,529 7,175 6,495 6,813 1. Private Sector 2,683 3,038 3,502 4,422 5,148 6,066 6,675 6,011 6,320 a. Agriculture (27) (19) (28) (25) (29) (41) (34) (56) b. Livestock (352) (345) (336) (403) (461) (587) (498) (504) c. Industry (752) (915) (768) (865) (966) (1,014) (949) (1,163) d. Commerce (1,497) (1,702) (2,309) (2,993) (3,489) (3,978) (4,171) (4,094) e. Construction (7) (11) (8) (26) (62) (115) (87) (136) f. Other (49) (45) (54) (111) (142) (331) (272) (367) 2. Miscellaneous Assets 177 276 434 486 423 464 500 483 494 D. Liabilities to Central Bank 89 75 105 81 51 60 332 6 37 E. Liabilities to Private Sector 3,896 4,535 5,243 6,076 7,201 8,171 9,078 7,761 8,743 1. Sight Deposits 1,651 1,681 1,776 1,786 1,976 2,015 2,376 2,036 2,204 2. Time and Savings Deposits 1,417 1,893 2,213 2,964 3,692 4,493 4,964 3,926 4,727 3. Other Deposits 55 61 110 127 88 92 88 193 84 4. Private Capital and Surplus 773 900 1,143 1,198 1,444 1,571 1,650 1,607 1,729 Source: Central Bank of Paraguay and Staff Estimates. Table 6.4: CONSOLIDATED ACCOUNTS OF THE BANKING SYSTEM, 1964-70 (in millions of current 0) E N D OF Y E A R JULY 31 1964 1965 1966 1967 1968 1969 1970 1969 1970 A. Net Foreign Reserves 205 801 626 -15 -278 -726 55 -1,278 -302 1. Assets 967 1,660 1,739 1,718 1,728 1,681 1,472 2,560 2. Liabilities -762 -859 -1,113 -1,733 -2,006 -2,407 -2,750 -2,862 B. Net Domestic Credit 7,103 8,277 9,839 12,271 14,878 17,465 18,856 16,997 18,083 1. Public Sector (net) 2,785 2,884 2,740 3,174 3,791 3,974 3,974 3,777 3,887 a. Central Government (1,672) (1,762) (1,630) (1,776) (1,963) (2,013) (1,915) (1,671) b. Wheat Commission (372) (370) (353) (435) (475) (466) (551) (536) c. Other Entities (741) (752) (758) (963) (1,353) (1,495) (1,311) (1,680) 2. Private Sector 5,372 6,575 8,141 10,250 11,944 14,520 16,167 14,051 15,453 a. Agriculture (774) (1,004) (1,134) (1,410) (1,986) (3,228) (2,879) (3,629) b. Livestock (718) (972) (1,327) (1,878) (2,400) (2,914) (2,540) (2,873) c. Industry (1,514) (2,015) (2,310) (2,713) (2,764) (3,002) (2,897) (3,174) d. Conmerce (1,812) (1,956) (2,650) (3,437) (3,905) (4,501) (4,709) (4,673) e. Construction (62) (64) (59) (75) (109) (160) (132) (179) f. Forestry (69) (61) (76) (87) (85) (62) (68) (63) g. Other (285) (276) (284) (341) (375) (558) (504) (580) h. Central Bank Credit./ (140) (227) (299) (310) (320) (295) (322) (282) 3. Miscellaneous Accounts -1,054 -1,182 -1,042 -1,153 -857 -1,029 -1,285 -831 1,257 a. U.S. Government Deposits (-838) (-911) (-657) (-560) (-426) (-517) (-438) (-472) b. International Agency Deposits (-298) (-407) (-489) (-594) (-484) (-356) (-393) (-374) c. Advance Import Deposits (-351) (-392) (-450) (-408) (-485) (-481) (-450) (-416) d. Ex-Bank of Paraguay (641) (739) (809) (892) (989) (1,054) (1,014) (1,103) e. Official Capital and Surplus (-785) (-919) (-1,241) (-1,429) (-1,573) (-1,731) (-1,697) (-1,933) f. Unclassified Assets (net) (659) (772) (1,065) (1,019) (1,103) (1,019) (1,060) (757) g. Inter-Bank Float (-82) (-64) (-79) (-73) (19) (-17) (73) (78) C. Long-Term Liabilities to Foreign Institutions 375 1057 653 4 4 57 3 4,675 D. Liabilities to Private Sector 6,933 8,021 8,811 9,911 11,302 12,553 13.854 11,838 13,106 1. Money 4,548 4,953 5,026 5,221 5,647 5,937 6,687 5,643 6,088 a. Currency in Circulation (2,624) (2,925) (2,903) (3,048) (3,269) (3,455) (3,846) (3,153) (3,422) b. Demand Deposits (1,924) (2,028) (2,123) (2,173) (2,378) (2,482) (2,841) (2,490) (2,666) 2. Quasi Money 2,385 3,068 3,785 4,690 5,655 6,616 7,167 6,196 7,019 a. Time and Savings Deposits (1,554) (2,107) (2,531) (3,365) (4,123) (4,953) (5,429) (4,396) (5,206) b. Other Deposits (58) (61) (111) (127) (88) (92) (88) (193) (84) c. Capital and Surplus (773) (900) (1,143) (1,198) (1,444) (1,571) (1,650) (1,607) (1,729) 1/ Includes Central Bank mortgage and personal loans to its own employees. Source: Central Bank of Paraguay and staff estimates. Table 6.5: CHANGES IN OUTSTANDING BANK CREDIT BY ORIGTN, DESTINATION AND FINANCING, 1965-70 (millions current 0) First 7 Months 1965 1966 1967 1968 1969 1970 --1-969 1970 ORIGIN 1,174 1,562 2,3 2,607 2,587 1,391 2,119 618 1. CEntral Bank -93 139 581 748 431 130 297 -207 2. National Development Bank 735 831 834 1,118 1,242 886 829 465 a. Total Credit (709) (826) (908) (1,061) (1,511) (903) (1,040) (557) b. Operations with Oentral Bank (26) (5) (-74) (57) (-269) (-17) (-211) (-92) 3. Commercial Banks 516 607 1,011 649 951 374 942 265 a. Total Credit (454) (622) (972) (663) (958) (646) (924) (284) b. Less Operations with Central Bank (62) (-15) (39) (-14) (7) (-272) (18) (-19) 4. Interbank Float 18 -15 6 92 -36 - 54 95 IDESTINATION 1,174 1,562 2,432 2,607 2,587 1,391 2,119 618 1. Public Sector 99 -144 434 617 183 - -14 -87 2. Private Sector 1,203 1,566 2,109 1,694 2,576 1,647 2,107 933 a. Agriculture (230) (130) (276) (576) (1,242) (893) (401) b. Livestock (254) (355) (551) (522) (314) (140) (159) c. Industry (501) (295) (403) (51) (238) (133) (172) d. Commerce (144) (694) (787) (468) (596) (804) (172) e. Construction (2) (-5) (16) (34) (5') (23) (19) f. Forestry (-8) (15) (11) (-2) (-23) (-17) (1) g. Other (-9) (8) (57) (34) (183) (129) (22) h. Central Bank Credit (87) (72) (11) (10) (-25) (2) (-13) 3. Miscellaneous Accounts -128 iho -111 296 -172 -256 26 -228 FIANCING 1,174 1,562 2,4~32 2,607 2,587 1;391 2,119 618 1. Long Term Foreign Liabilities 682 596 691 954 888 871 583 48 2. Net International Reserves -596 175 641 263 448 -781 1,000 -424 3. Money hoS 73 195 426 290 750 -4 151 a. Currency (301) (-22) (145) (221) (186) (391) (-116) (-33) b. Demand Deposits (104) (95) (50) (205) (1oh) (359) (112) (184) 4. Quasi Money 683 717 905 965 961 551 5hi 403 a. Time and Savings Deposits (553) (424) (834) (758) (830) (h76) (273) (253) b. Other (130) (293) (71) (207) (131) (75) (268) (150) Source: Central Bank of Paraguay and Staff Estimates. Table 7.1: DISTRIBUTION OF LAND BY ACTUAL AND POTENTIAL USE, VALUE-ADDED AND EMPLOYMENT Actual Use (1969) Potential Use-l/ Value-Added (1969) Emrployment (1968) Hectares Hectares Workers Uses ('000) % ('000) % Million 0 % ('000) % Crops 882 2.2 8,788 21.6 12,6h8 57.4 319.2 80.9 Livestock 14,848 36.5 39,724 97.7 6,774 30.8 36.4 9.3 Forests 24,0001/ 59.0 31,058 76.4 2,601 11.8 39.0 9.8 Water and Other 944 2.3 944 2.3 - _ TOTALS 40,675 100.0 40,675 100.0 22,023 100.0 394.6 100.0 1/ Of the 24 million hectares covered with forest approximately 6 million hectares are thought to contain woocd which are both accesible and of a commercially exploitable quality. Most of this area has been subjected to some degree of exploitation. 2/ These estimates refer to the natural suitability of the land for alternative uses. Thus components do not add to totals since, in many cases, the same land is suitable for more than one use. Source: Secretaria Tecnica de Planificacion: "Diagnostico del Sector Agropecuario y Forestal"; also, Ministerio de Agricultura y Ganaderia. Table 7.2: LAND TENANCY A. OWNERSHIP DISTRIBUTION OF GRAZED AND/OR CULTIVATED LAND 1 9 5 6 C E N S U S 1961 CENSUS UNITS HECTARES UNITS Size Classes (Has.) No. No. No. Less than 1 6,422 4.3 4,403 0-03 7,937 4.9 1 - 4.9 62,292 41.7 159,303 0.95 66,122 41.4 5 - 9.9 34,949 23.4 230,207 1.37 37,735 22.5 10 - 19.9 25,192 16.8 316,663 1.88 26,451 16.4 20 - 49.9 12,982 8.7 341,158 2.03 13,700 8.5 50 - 99.9 2,837 1.9 183,260 1.09 3,053 1.9 100 - 999.9 3,391 2.2 997,762 5-93 3,650 2.3 1,000 - 4,999.9 1,015 0.6 2,220,452 13.20 1,081 0.6 5,000 - 9,999.9 259 0.2 1,794.716 10.67 270 0.2 10,000 - 19,999.9 130 0.1 1,786,700 10.62 132 0.1 20,000 and Over 145 0.1 8,782,991 52.23 146 0.1 TOTAL 149,614 100.0 16,816,619 100.00 160,777 100.0 B. RESETTLEMENTS EFFECTED BY INSTITUTO DE BIENESTAR RURAL; 1957-69 FOR CULTIVATION FOR GRAZING TOTAL Average Average Location Number Hectares Hectares Number Hectares Hectares Number Hectares Central Zone 12 579 123 759 9.8 46 18 980 412.6 12,625 142,738 Departamento Central 5 7,63 7T 13 1,081.6 1,590 13,071 Cordilleras 2,955 26,979 9.1 7 1,836 262.3 2,962 28,814 Paraguari 3,729 36,902 9.9 22 6,495 295.2 3,751 43,397 Guaira 4,310 52,215 12.1 12 5,241 436.8 4,322 57,456 Southeast Zone 11 678 195 599 16.7 134 45,310 338.1 11,812 240 910 Misiones 7 12, 2 19.0 -3,906 73229 Neembucu 1,891 37,793 20.0 43 16,183 376.3 1,934 53,976 Caazapa 4,037 58,381 14.5 7 2,530 361.4 4,044 60,912 Itapua 5,074 86,601 17.1 28 22,691 810.4 5,102 109,293 Northeast Zone 25 249 407 398 16.1 157 74 172 472.4 25,406 481,568 Alto Parana 2,354 50,919 21.6 -17 970.8 2,372 68,393 Caaguazu 8,200 116,014 14.1 18 7,667 425.9 8,218 123,680 Amambai 2,933 57,725 19.7 47 15,470 329.1 2,980 73,195 San Pedro 6,842 110,025 16.1 25 10,105 404.2 6,867 120,130 Concepcion 4,920 72,715 14.8 49 23,456 478.7 4,969 96,170 Chaco (Northwest Zone) 1,625 27,490 16.9 533 1,287,575 2,415.7 2,158 1,315,065 TOTAL 51,131 754,245 14.8 870 1.426,036 1.639.1 52,001 2,180,280 Source: Secretaria Tecnica de Planificacion. Table 7.3: INPUTS AND PRODUCTIVITY IN AGRICULTURE (monetary values in millions 1969 0) I N P U T S PRODJCTION COEFFICIENTS Hectarage Labor ('000 man-years) Capit -T Gross 1/ Value Output/ Output/ Investment Planted Available Utilized % Utilization Stock- Investment- Added Hectarage Plan Year- ACOR3 Coefficient4-/ 1962 688.1 269.5 178.2 66.1 30,778 991 10,521 15.3 59.0 2.93 9.4 1963 720.6 278.2 186.8 66.0 31,117 84o 11,559 16.0 61.9 2.69 7.2 1964 718.4 286.8 185.9 64.9 31,30h 1,017 11,530 16.0 62.0 2.72 8.8 1965 753.3 295.9 200.5 67.8 31,669 1,487 12,003 15.9 59.9 2.64 12.4 1966 767.3 305.9 198.6 65.0 32,495 1,313 11,323 14.8 57.0 2.87 11.6 1967 800.0 316.4 206.8 65.4 33,115 l,h89 12,131 15.2 58.7 2.73 12.3 1968 825.6 319.5 215.0 67.4 33,874 2,085 12,373 15.0 57.5 2.74 16.9 1969 852.0 327.3 225.5 69.0 35,181 1,935 12,648 14.8 56.1 2.78 15.3 1/ Current data on capital stock and gross investment in agriculture deflated by implicit deflator derived for value-added in agriculture. 2/ Utilized manpower only. 3/ Average capital output ratio. :/ Gross investment in agriculture as a percent of value-added in the sector. Over the 1962-69 period as a whole the cumulative incremental capital output ratio was 4.34 i=1968 / EIi/ (i.e., i = 1962/Y-l969 - Y-1962 = 4.34). Source: Secretaria Tecnica de Planeacion. Table 7.4: AGRICULTURE: GROSS OUTPUT VOLUME AND VALUE AND PRODUCERS PRICE INDEXES FOR CROP PRODUCTION IN SELECTED YEARS (1,000 tons, millions 1969 X, indexes 1967 = 100) 1962 1965 1969 Average Annual Price Price Price 1976 (Projected) % Volume Value Index Volume Value Index Volume Value Index Volume Value 1969/62 1976/69 1. Major Cash Field Crops 3,859.6 4 588.o 4,558.1 6,8128 2.4 5.9 Cotton 32.5 1475.7 113.0 42.0 114.7 114.6 4C.5 590.0 108.0 49.4 719.7 3.1 2.9 Rice 37.7 374.5 lo0.o 37.0 367.6 124.7 27.2 269.9 96.8 38.4 380.7 -4.8 5.o Onions 8.9 128.4 75.0 14.1 203.4 92.6 17.1 246.7 70.4 21.4 308.7 9.8 3.3 Peanuts 20.5 265.0 97.5 19.2 248.2 109.9 16.2 209.4 105.8 31.7 409.8 3.4 10.1 Potatoes 6.2 101.5 94.1 8.4 136.4 83.5 10.1 164.0 80.3 12.5 203.0 7.1 3.1 Soy bean 2.9 21.8 117.1 18.0 135.0 97.6 22.0 165.0 91.5 56.3 422.2 33.5 14.4 Tobacco 16.0 470.0 109.4 18.0 528.8 95.3 24.O 705.1 88.4 31.3 919.6 6.o 3.9 Wheat 7.2 76.9 72.0 5.5 58.8 89.0 32.0 341.9 107.0 60.4 645.o 23.8 9.5 Sugar Cane 770.4 609.0 79.5 998.0 788.9 100.0 942.7 745.2 97.8 1,237.9 978.6 2.9 4.0 Alfafa 20.0 106.8 80.0 22.9 122.3 92.0 24.7 132.8 i10.0 21.0 112.8 3.2 -2.4 Corn 234.5 1,230.0 90.0 258.7 1,356.9 96.0 188.4 988.1 90.0 326.6 1,712.7 8.2 2. Major Subsistence Crops 4,050.7 4,430.1 4,679.6 5,918.9 2.1 3.4 Beans 30.6 353.3 103.4 36.2 41T7.7 101.9 26.8 3. 110.0 35.1 404.2 -1.9 3.9 Manioc 1,366.9 3,176.0 89.7 1,472.0 3,420.2 96.6 1,624.8 3,775.3 103.4 2,053.7 4,771.8 2.5 3.4 Sweet f2tatoes 114.6 391.7 86.8 132.0 451.2 100.0 128.0 437.7 114.1 159.0 543.6 1.6 3.2 Squash- 10.1 129.7 108.4 11.0 1441.0 100.0 12.3 157.7 101.2 15.5 199.3 2.8 3.4 3. Major Tre Crops 2,118.8 2 590.4 2,915.2 3 775.5 4.7 3.8 Bananas'e 9.5 494.0 87.7 11.4 90.5 13.6 711.9 111.9 17.3 '9t. 3 7f Coffee 4.0 206.3 87.8 6.o 311.8 94.5 4.2 219.1 103.0 6.7 349.5 0.9 6.9 Citrus (Oranges, Tangerines, Grapefruit) 1,307.9 591.7 140.0 1,435.2 651.8 123.0 1,612.8 729.9 123.3 1,947.9 881.6 3.0 2.7 Pineapple!/ 13.7 183.2 92.0 15.9 212.5 100.0 17.1 228.4 110.4 23.7 316.6 3.2 4.8 Tung 34.7 87.2 289.4 25.0 62.8 212.7 86.4 216.9 153.2 105.1 263.8 13.9 2.8 Yerba Mate 11.5 127.0 93.8 21.9 242.0 106.4 19.8 218.9 90.9 25.4 280.8 8.1 3.6 Petit Grain (Sour Orange) 62.8 89.7 73.0 63.0 90.2 99.8 99.3 142.0 104.5 133.8 191.3 6.8 4.4 Coco 72.9 69.0 158.0 140.0 132.5 227.3 190.7 180.5 111.2 244.4 231.3 14.7 3.6 Castor Bean (Tartago) 14.0 175.6 66.5 15.0 188.0 92.6 12.2 153.4 98.5 16.2 203.7 -2.0 4.1 Grapes (Vid) 9.7 94.3 109.4 10.6 103.0 103.6 11.7 114.2 118.4 15.5 151.3 2.8 4.1 4. Other Agricultural Products 1,177.4 1,174.2 1,296.9 1,442.6 1.4 1.6 Total 11,206.5 12,782.7 13,449.8 17.949.8 2.6 4.3 1/ Millions of fruits. 2/ Millions of stalks. Source: Central Bank of Paraguay; Ministry of Agriculture and Livestock, Technical Planning Secretariat and Staff Estimates. Table 7.5: PROFITABILITY OF CROP PRODUCTION ON SMALL FARMS, 1968/69 AGRICULTURAL YEAR (Values in Current Guaranies per Hectare) Wheat Corn Cotton Tobacco Soybean Rice Potatoes A. Costs 7.920 L20 12,891 19.765 7,527 22,488 39.922 1. Labor!/ 4,990 4,700 10,000 17,360 5,600 15,500 10,700 2. Inputs (seed, fertilizer, pesticides, tc. )2/ 2,790 580 2,670 2,290 1,835 6,750 27,830 3. Interest (@ 5 percent of input costs)3 150 25 135 115 92 338 1,392 B. Yield (kg./hectare) 1,240 1,830 1,100 1,700 1,360 2,900 9,330 C. Farmgate Prices (0/Kg.) 1. Departamento Central 9.9 3.5 15.0 19.0 7.2 10.8 7.3 2. Other A-eas4/ 8.9 2.5 lb.0 18.0 6.2 9.8 6.3 D. Gross Income (C x B) 1. Departamento Central 12,276 6,405 16,500 32,300 9,792 31,320 68,109 2. Other Areas 11,036 4,575 15,400 30,600 8,1432 28,520 58,779 E. Net Income (D - A) 1. Departamento Central 4,356 1,201 3,606 12,535 2,265 8,832 28,187 2. Other Areas 3,116 629 2,506 10,835 905 5,932 18,857 F. Capi tal-/ 1. Departamento Central 17,820 17,820 17,820 17,820 17,820 17,820 17,820 2. Other Areas 3,940 3,940 3,9140 3,950 3,940 3,940 3,940 G. Opportunity Cost of Capital(@ 10 percent)- 1. Departamento Central 1,782 1,782 1,782 1,782 1,782 1,782 1,782 2. Other Areas 395 395 394 394 395 394 395 H. Net Return (E - G) 1. Departamento Central 2,574 -581 1,824 10,753 1483 7,050 26,1405 2. Other Areas 2,722 235 2,112 lo0,114 511 5,538 18,463 I. Net Return on Costs (H/1A x 100) 1. Departamento Central 32.5 -11.2 15.1 '1.5M 6.14 31.L 66.1 2. Other Areas 34-. 1-5 16.1 52.8 6.8 2l.6 146.2 1/ Includes cost of landholder's own labor but excludes any salary for management. 2/ Excludes transport costs. 3/ Assumes landholder borrows funds for six months to finance inputs at 10 percent annual interest rate. (This is Banco Nacional de Fomento rate, commercial bank rates would be as much as twice the BNF rate). 4/ Assumes average transport costs to Asuncion of 1G/Kg. 5/ Essentially, this item reflects the per hectare cost of land. 0/ Used in lieu of depreciation; financial investments in Paraguay yield at least 10 percent per annum. Source: Banco Nacional de Fo.mento, Dato Agropecuario (data taken from cash flow analysis done in connection with the BNi line of credit to small-scale agriculture). T ,ble 7.6: HECTARAGE, YIELD AND FRICE OF PRINCIPAL CASH CROPS H = thousands of hectares; Y = kilogramns per hectare; P = constant Guaranies per kilo1/ kilo-~~~~~~~~~~ 1962 1963 196 _ 1965 1966 1367 1968 1969 1{ Y P .i Y P H Y P H Y Y H Y P H Y P H Y P . Y P klfalfa 4.o 5,ooo 6.6 5.5 4,50o 5.9 5.9 b,ooo 5.3 5.0 3,600 5.9 5.1 3,600 5.9 5.2 3,60o 5.2 5.7 5,000 5.1 L.8 ,oD. L.1 .orn 95.0 1,300 6.3 96.o 1,250 7.7 158.8 1,300 5.3 161.5 1,300 6.9 150.5 l,loo 8.0 173.0 1,300 6.2 180.0 1,000 5.1 127.5 1,200 9.9 .otton 50.0 650 18.9 63.0 630 18.6 48.6 750 18.5 56.7 710 17.5 62.8 60 14.7 38.2 700 16.7 37.2 81o 16.5. 61.0 67s L1.0 )nions 2.8 3,200 18.7 2.8 5,000 16.6 2.9 5,700 11.7 3.o 5,700 13.3 3.2 5,700 13.8 3.5 5,000 13.9 2.2 5,100 11. 2.0 8.500 12.0 Peanuts 10.7 850 13.6 10.0 850 15.6 22.6 850 15.6 22.6 850 15.7 23.3 850 1L.1 25.5 850 12.5 22.5 800 12.3 21.6 750 12.0 Potatoes 1.2 3,200 16.5 1.2 3,300 20.2 1.6 5,000 16.0 2.1 ,0)oo 12.2 2.2 5,000 13.4 2.0 5,000 15.7 1.3 7,500 11.3 1.3 7,800 12.0 lice 7.0 2,s00 10.7 7.0 2,300 13.9 8.0 2,500 13.2 8.0 2,700 11.7 5.6 2,200 1l.6 7.2 2,500 9.6 9.0 2,300 10.3 13.2 2,30) s.z ioybean 1.8 1,600 11.1 5.5 1,6O 10.6 6.2 1,600 10.5 11.2 1,600 8.5 15.2 1,400 10.6 12.8 1,500 8.5 8.4 1,600 8.2 12.2 1,800 7.5 Suga- Zane 22.4 30,000 o.68 23.0 30,000 o.66 26.8 36,ooo 0.80 26.8 37,000 0.79 26.0 38,000 o.65 26.0 38,000 0.76 20.6 35,0oo 0.73 23.5 35,000 o.63 robacco 12.0 1,200 56.4 20.0 1,250 59.3 9.5 1,250 SI.3 19.6 1,250 41.h 7.0 1,250 55.5 10.8 1,250 36.9 18.3 1,200 32.8 20.0 1,200 3-D. qheat 8.0 900 8.3 10.0 700 9.2 9.7 900 9.3 10.8 650 9.6 7.2 1,000 8.0 8.3 1,100 7.0 20.9 1,200 10.0 31.6 9s5 10.9 1/ In order to give an idea of the purchasing power of the producers' price, current prices were deflated by the GDP deflator. Source: Ministry of Agriculture and Livestock; "Manual Estadistico del Paraguay'. Note that in many cases the production figures given by the Ministry of Agriculture differ from those used in national accounts calculations by the Central Sank. Table 7.7: FIVE-HUNDRED HECTARE "ENTREPRENEURIAL AGRICULTURE" PROJECT; RETURN ON INVESTED CAPITAL VALUES (in '000 of 0, except where indicated otherwise) Wheat4/ Corn2/1 Soybean:/ Total Hectarage (number) 500 200 300 Yield (Kg./hectare / 1,200 2,200 1,200 Producers' Price (0/Kilo) 10.7 4.0 8.5 Gross Sales 6,420.0 1,760.0 3,060.0 11,240.0 Costs of Cultivation 4,114.5 1,515.8 2,486.8 8,117.1 Labor 14.3 15.0 9.0 38.3 Machinery4/ 1,035.2 351.8 477.8 1,864.8 Seed 750.0 40.0 144.0 934.0 Fertilizer 1,350.0 540.0 810.0 2,700.0 Pesticide 150.0 90.0 385.0 825.0 Sackage 90.0 45.0 45.0 180.0 Transport 725.0 434.0 416.0 1,575.0 Administrative Costs 378.0 Working Capital Credit 4,000.0 Interest @ 10 percent 400.0 Land Tax (at 10 per mil.) 20.0 Depreciation on buildings 2,092.0 Net Return 2,092.0 Capital 15,887.4 Land 2,000.0 Improvements and Machinery 13,887.4 Return on Capital 13.2 L 1/ Winter crop. 2/ Summer crop. 3/ Note differences from national averages shown in Table 7.6. EI Includes cost of labor operating machinery, cost of renting machinery and depreciation of owned machinery. 5/ This project was formulated in 1968. While producers' prices on average have met expectations both hectarage planted and yields fell well below projected levels during the first crop year thereafter owing to delays in machinery shipment and planting as well as to other factors. Thus BNF development loan had to be re- financed. Subsequently, however, performance was substantially improved owing largely to increased technical assistance to the entrepreneur and accumulation of experience on his part. The entrepreneur had had no previous experience with mechanized double crop agriculture. Table 7.8: LIV2STOCK: GROSS OUTPUT VOLUME, VALUE AND PRODUCERS PRICE INDEXES FOR LIVESTOCK PFOJUCTION IN SELEDTiTD YaRS (1,000 animals - except where otherwise indicated, millions 1969 0, index - 1967 = 100) 1 9 6 3 1 9 6 6 1 9 6 9 Average Annual Price Price Price 1976 % Change Volume Value Index Volume Value Index Volume Value Index Volume Value 1969/63 1976/69 Herd Cattle 5,353 5,467 5,593 7,015 Hogs 714 852 958 1,260 Poultry 5,996 6,611 7,653 10,76d Sheep 447 434 421 435 Horses 639 653 596 481 Goats 50 4d 46 46 Herd Increase during Year 5 157 426 994 Cattle 53 - 108 302 Hogs 47 33 37 48 Poultry 145 315 365 513 Sheep 10 -4 -4 2 Horses 17 -20 -18 -15 Goats 3 - -1 - Animal Slaughter 5.300 6 256 6 339 8 517 Cattle 577.0 3,790 91.4 674.8 4,43 102.7 639.5 tl20 106.9 844.6 1.7% 4.0% Hogs 476.4 1,260 101.4 577.1 1,527 125.6 673.2 1,781 100.1 987.0 2,611 5.9% 5.6% Poultry 1,620.7 137 84.8 1,d24.8 154 97.2 2,091.8 177 104.4 3,118.0 264 4.4% 5.9% Sheep 98.3 74 85.6 97.3 73 94.6 96.0 72 113.9 100.4 75 0.4% 0.8% Horses 2.2 2 62.0 28.0 30 93.8 56.4 60 109.8 - - Goats 18.8 14 85.6 18.1 14 94.7 17.3 13 113.9 17.6 13 1.4% 0.4% Other Fowl n.a. 23 95.5 n.a. 26 96.3 n.a. 35 121.7 n.a. 30 Other Livestock Products 1,833 1957 2,084 2,o91 Milk (millions of liters) 79.6 955 91.7 83.0 996 100.0 84.4 1,013 100.0 111.3 1,336 1.0% 4.o% Eggs millions of units) 208.0 800 90.8 226.1 870 68.5 254.7 980 107.5 375.7 1,445 3.4% 5.7% Wool (tons) 281 25 106.2 345 31 100.0 343 31 112.9 360 32 3.4% 0.7% Honey ('000 of liters) 335 22 86.7 367 24 96.8 384 25 104.8 506 33 2.3% 4.0% Bristles (tons) 217 31 72.8 253 36 104.3 247 35 136.2 321 45 2.2% 3.6% TOTAL 7 ,636 8,370 d 850 12,402 2.5% 4.9% Source: Central Bank of Paraguay, Ministry of Agriculture and Livestock and staff estimates. Table 7.9: RE,TURN ON OPERATIONS OF A 4,000 HA. CATTLE RANCH (numbers of animals, kilos per animal, 0 '000) Animals Sold Sales Value Number Weight A-5 Bb/ C' Herd 1,322 1664/ 1,287 1,494 1a964 Cows 400 36 320 152 184 242 Bulls 50 Calves 240 Hufers - 1 year 108 Steers - 1 year 108 Hufers - 2 years 105 Steers - 2 years 105 Hufers - 3 years 103 103 320 435 527 692 Steers - 3 years 103 103 400 700 783 1,030 Capital 7,571 Land-1/ 4,320 Other Assets 3,251 Fencing (1,092) Buildings (775) Water Storage (1,075) Vehicles (60) Implements (124) Labor Animals (125) Total Costs 12365 Variable 1,107 Wages and Subsistence (264) Sanitation (66) Fuel (4) Maintenance (33) Management Salaries (300) Interest2/ (198) Taxes3/ - (36) Transport and Other Selling Expenses (186) Depreciation 258 Net Return -78 129 599 8/ Return on Capital -0.1% 1.7% 7.9%- 1/ As a rule of thumb in Paraguay it can be assumed that hectarage needed to support one animal has a value of 04,000. On this ranch average hectares per animl equal 3.70. This average land value is estimated at 01,080/hectare. 2/ Amounts to 17.6 percent of other variable costs and would include interest on workirg capital financing as well as on BNF investment credit. 3/ Land tax; at effective rate of only 0.8 percent assumes fiscal value approximately d0 percent of real value. Cattle transfer taxes are included in "selling expenses". 4/ Assumes carrying capacity of ranch is 1,080 animals. 7/ Case A assumes that all animals are sold to traditional frigorificos at prices prevailing when project was formulated (i.e. 013.2/kilo for cows and 017.0/kilo for steers). 6/ Case B assumes either that all animals slaughtered for internal consumption at prices prevailing when project was formulated or that all animals sold to traditional frigorificos at prices likely to prevail during 1971 slaughter season (i.e. in both instances prices would be 016/kilo for cows and 019/kilo for steers). 7/ Case C assumes that all animals sold either for internal consumption or to new frigorificos at prices prevailing in 1970 (i.e. 021/kilo for cows and 025/kilo for steers). 8/ This does not represent rate of return overtime on this new investment but merely rate of return on total capital during year depicted by this table; the table being designed to show the cash flow feasibility of a given ranch at varying sales prices. Source: Banco Nacional de Fomento, Gabinete Tecnico de la Presidencia "Costo de Produccion de Carne de Establecimiento Ganadero de 4,000 ha., 1,080 animales de Plantel Base. Table 7.10: FORESTRY: GROSS OUTPUT VOLUME AND VALUE AND PRODUCERS' PRICE INDEXES FOR PRINCIPAL FORESTRY PRODUCTS IN SELECTED YEARS (1,00 tons, millions 1969 X, indexes - 1967 = 100) 1962 1965 1969 1976 Average Annual Price Price Price % Change Volume Value Index Volume Value Index Volume Value Index Volume Value 1969-62 1976-69 Logs for Lumber 464.2 665.5 82.4 688.1 959.2 87.1 565.3 802.5 133.9 883.8 1,254.6 2.8 6.6 Quebracho Logs for Extract 121.8 361.4 82.7 98.3 283.6 89.4 50.0 146.9 134.o 81.0 238.0 -13.6 7.1 Posts 117.7 98.8 77.5 126.1 103.0 103.1 138.1 114.9 103.0 171.4 142.6 2.3 3.1 Sleepers 7.6 18.4 44.5 4.3 10.3 72.9 6.7 16.1 105.2 8.8 21.1 -1.8 4.o Splinters Chunk and Firewood 1,300.3 1,021.7 62.2 1,330.5 1,016.5 76.4 1,451.7 1,129.5 90.4 1,859.5 1,446.8 1.6 3.6 Charcoal 89.1 249.5 78.6 97.3 267.7 92.9 109.2 305.9 100.0 139.9 391.8 2.9 3.6 Palm 23.5 60.0 51.3 17.3 42.4 78.7 11.7 28.7 86.4 10.7 26.2 -10.4 -1.3 Heart of Palm 0.1 5.6 76.3 2.7 149.o 102.6 5.5 309.3 93.3 5.5 309.3 77.3 - Total 2,480.9 2,831.7 2,853.8 3,830.4 2.0 4.3 Sources: Central Bank of Paraguay, Ministry of Agriculture and Livestock, Technical Planning Secretariat and Staff Estimates. Table 8.1: GROSS DLME;STIC PROFJCT IN MANUFACTURING, 1962-69, COMPOSITION AND TRENDS (millions of 1965 Guaranies) Percent Percentage Distribution change 1962 1963 1964 1965 1966 1567 1966 1969 1962 1969 1962-65 Consumer Goods 5,678 5,842 5,623 6,43 6,765 6,838 7,082 7,377 70.8 64.9 25.9 Food Products 3,506 3,439 3,681 3,804 3,856 8,001 4,161 4,304 42.3 37.9 22.8 Beverages 274 295 304 334 382 437 494 561 3.3 4.9 4.7 Tobacco 453 406 440 536 464 427 450 460 5.5 4.1 1.5 Textiles 621 657 635 725 570 611 6 LO 715 7.5 6.3 15.1 Footwear and Cloth ing 288 312 333 357 382 L404 414 436 3.5 3.8 51 4 Printed Matter 146 161 162 166 176 172 177 183 1.8 1.6 25.3 Varicas 588 572 640 521 639 706 746 718 6.9 6.3 22.1 Intermediate Goods 1,980 1,925 2,13L 2,245 2,433 2,730 3,011 3,250 24.0 28.6 64.1 Wood and Cork Prodacts 411 385 419 459 448 428 489 638 5.0 5.6 55.2 Pulp and Paper 5 7 9 12 13 12 14 14 0.1 0.1 180.0 Rubber Products 6 5 5 5 5 5 5 5 0.1 0.0 -16.7 Chemicals 675 616 715 718 731 712 806 805 8.1 7.1 19.3 Petrol Prodicts - - - - 144 490 556 562 - 4.9 - Nonmetallic Minerals 217 243 279 314 338 312 346 396 2.6 3.5 82.5 Basic Metals 14 14 15 15 16 16 16 17 0.2 0.1 21.4 Metal Prodacts 74 79 90 97 101 105 108 141 0.9 1.2 90.5 Furniture 82 86 89 92 95 98 109 113 1.0 1.0 37.8 Leather and Leather Prodacts 1496 490 510 533 542 552 562 559 6.o 4.9 12.7 Capital Goods 1428 459 488 524 558 655 718 747 4.2 6.5 74.5 Machinery 1148 152 157 157 159 161 166 169 1.8 1.5 14.2 KLectri c Etuipmen t 514 67 81 99 109 119 126 142 0.7 1.2 63.0 Transport Eqiipment 226 240 250 268 290 375 426 436 2.7 3.8 92.9 T O T A L 8,284 8,226 8,814 9,212 9,460 10,223 10,811 11,374 100.0 100.0 37.3 As percentage of GDP 15.7 15.3 15.9 15.5 15.6 15.9 16.1 16.3 G D P 52,913 53,7014 55532 59 60,529 6L,270 67,182 69,904 32.1 Source: Central Bank of Paraguay, National Acccants, July 1970. Table 8.2: LABOR UTILIZATION IN MANUFACTURING (Number of persons employed) Industry 1955 1963 1969 Food production 8,896 10,666 14,216 Beverages 1,989 1,564 Tobacco 475 821 Textiles 2,917 2,062 3,754 Footwear and Apparel 2,994 2,387 4,347 Lumber and Wood Products 1,974 1,955 Furniture and Fixtures 958 1,059 Pulp and Paper 66 60 Printing and Publishing 689 947 Leather and Leather Products 744 705 Rubber Products 79 55 Chemicals 8,082 4,736 5,694 Coal and Petroleum Products - 3 95 Non-metallic Minerals 2,446 4,911 4,257 Basic Metals 58 71 Metal Fabricating 549 Non-electric Machinery 925 Electrical Machinery & Equip. 569 446 Transport Equipment 1,974 Miscellaneous Industries 1,513 1,979 Subtotal Industry 34,449 37,875 44,816 Handicraft (Artesan1a) 49,921 64,156 TOTAL 87,796 108,972 Source: Banco Nacional de Fomento: Estructura Industrial del Paraguay; 1962 (data for 1955); Ministerio de Industria y Comercio; Cen- sos Economicos, 1966 (data for 1963); Secretaria Tecnica de Planificacion and IBRD staff estimates (for 1969). Table 8.3: TRENDS IN PHYSICAL OUTPUT AND VALUE ADDED IN MANUFACTURING INDUSTRY (1962 = 100) 1963 1964 1965 1966 1967 1968 1969 TRENDS IN PHYSICAL OUTPUT Product Cotton Textiles 104 110 115 101 116 124 131 Cotton Fibers 120 107 133 86 82 91 121 Tanning 48 83 81 75 38 48 45 Logs (for export) 78 111 148 152 109 91 84 Essential Oils 132 155 179 150 159 178 179 Industrial Oils 130 126 122 160 189 228 235 Cement 111 141 181 161 91 150 235 Beer 113 118 126 155 160 173 195 Sugar 108 148 109 103 113 104 130 Preserved Meat 101 105 121 100 144 114 93 Fresh meat 101 104 105 119 127 131 139 TRENDS IN VALUE ADDED Industry Food Production 98 105 109 110 116 119 123 Beverages 108 111 122 139 159 180 205 Tobacco 90 97 118 102 94 99 101 Textiles 106 102 117 92 98 103 115 Footwear and Clothing 109 116 124 123 140 144 151 Wood and Cork 94 102 112 109 104 119 155 Furniture 105 109 112 116 120 133 138 Paper and paper prod. 127 169 228 232 229 250 267 Printed matter 110 111 114 120 118 121 125 Leather & leatherprod 99 103 108 109 111 113 113 Rubber products 95 90 86 82 81 82 86 Chemicals 1/ 91 106 106 108 106 120 119 Petrol products- - - - 29 100 113 114 Non-metallic minerals 112 129 145 156 144 160 183 Basic Metals 102 103 108 111 113 117 120 Metal products 106 122 132 137 143 147 191 Machinery 103 106 106 107 109 112 114 Electrical Equipment 124 150 183 201 221 234 263 Transport Equipment 106 111 119 129 166 199 193 Various 102 103 107 112 117 121 135 TOTAL 99 106 111 114 123 131 137 1/ Paraguay's only refinery started production in 1966. Source: Central Bank of Paraguay: National Accounts, July 1970, and Boletin Estadistico Mensual, May 1970. Table 8.4: CAPITAL OUTPUT RELATIONSHIPS AND COST 1/ OF JOB FORMATION IN MANUFACTURING INDUSTRY Industry Capital Output Investment3per Ratio_/ Employee- (us $) Food production 0.8 3,500 Edible oils 0.7 5,000 Beverages 2.5 7,500 Textiles 2.4 2,500 Footwear 1.1 1,900 Lumber & Wood Prod. 0.8 2,000 Printing & Publishing 1.4 3,300 Chemicals 1.6 23,600 Pharmaceutics 1.5 15,000 Plastics 1.8 6,200 Non-metallic minerals 1.0 2,300 Metal working 1.3 6,400 Ceramics 1.2 3,300 AVERAGE 2.3-/ 4,000 1/ Estimates based on investments in existing and new establishments financed through BNF. 2/ Based on project data for new establishments. 3/ Averages for job creation in new and existing establishments. 4/ Manufacturing industry average as estimated by Secretaria Tecnica de Planificacion. Source: Calculated from basic data supplied by Banco Nacional de Fomento (BNF) and Secretarla Tecnica de Planificacion. Table 8.5: PROFITABILITY OF SOYBEAN OIL PRODUCTION, 1969-7o / Costs Percent Raw Materials 54.5 (of which Soybean) (5h.4) Labor 5.2 Electricity 16.I Fuel Oil 0.3 Water 0.1 Maintenance o.6 Depreciation 4.2 Packing Materials 18.7 Total 100.0 Sales 113.3 Soybean Oil 50.2 Soybean Meal 63.1 Net Return on Costs 13.3 Profits: Sales 11.7 1/ Estimates corresponding to a newly installed processing capacity of 7,500 tons of soybeans per year. Source: Secretaria Tecnica de Planificacion and industry data. Table 8.6: nJMBER OF TOURIST ARRIVALS AND GROSS EARNINGS FPOM TOURISM, 1964-70 Number of Percent Tourist Increase Expenditures Arrivals per Year (US$ million) 1w64 21,934 37.7 2.6 1965 25,281 15.3 3.0 1966 30,052 18. C 3.6 1967 h1,464 38.3 Ii* 1968 67,793 63.1 8.1 1969c 11:1,643I 64.7 13.3 19,70 (est.) 116,675 4.5 16.0 1/ Includes 10,410 visitors from Brazil attending the soccer world cup qualification, Paraguay vs. Brazil. Source: Direccion General. de Turismo, Planillas Hoteleras de Asuncion. Table 9.1: COST OF LIVING INDEX FOR ASUNCION, 1960-1970 (1964 100) Annual Year General Percent Foodstuffs Housing Clothing Various Index Change 1960 80.3 8.3 ( not available ) 1961 94.7 17.9 ( " 1962 96.3 1.9 ( " " ? 1963 98.2 1.8 ( " " 1964 100.0 1.8 100.0 100.0 100.0 100.0 1965 103.8 3.8 104.8 103.9 100.5 103.0 1966 106.8 2.9 107.8 105.8 103.0 107.5 1967 108.3 1.4 106.0 104.9 103.0 119.6 1968 109.0 0.6 106.2 105,6 103.7 121.9 1969 l11.5 2.3 108.2 108.6 108.6 123.8 1970 110.5 -0.9 105.9 108.3 110.1 124.2 1970 Jan. 109.6 0.1 104.5 107.4 109.6 123,9 1970 Reb. 109.9 -2.2 104.9 107.4 110.0 124.5 1970 Mar. 109.8 -3.1 104.7 107.4 110.0 124.5 1970 April 109.4 -1.5 103.8 107.4 110.0 124.5 1970 May 110.9 -0.3 106.7 108.2 110.2 124.2 1970 June 110.6 -0.1 105.7 108.8 110.2 124.2 1970 July 110.7 -0.9 106.1 108.8 110.2 124.2 1970 August 110.1 -2.6 104.8 108.8 110.1 124.1 1970 Sept. 110.9 -1.2 106.4 108.8 110.1 124.1 1970 October 110.3 -1.0 105.3 108.8 110.1 124.1 1970 Nov. 111.1 0.3 106.7 108.9 110.3 124.1 1970 Dec. 113.1 2.3 110.8 108.9 110.3 124.1 1971 Jan. 111.2 1.5 106.9 108.9 110.3 124.1 1/ Average cost of living for working class families. Source: Banco Centxal del Paraguay Table 9.2: IMPLICIT DEFLATOR, NATIONAL ACCOUNTS, 1950-70 Year GDP Deflator Percent change 1950 0.0428 - 1951 0.0728 70.1 1952 0.1334 83.2 1953 0.2334 75.0 1954 0.2943 26.1 1955 0.3702 25.8 1956 0.4668 26.1 1957 0.5506 18.0 1958 0.5764 4.7 1959 0.6442 11.8 1960 0.7604 18.0 1961 0.8185 7.6 1962 0.8579 4.8 1963 0.8990 4.8 1964 0.9244 2.8 1965 0.9405 1.7 1966 0.9677 2.9 1967 0.9651 -0.3 1968 0.9708 0.6 1969 1.0000 3.0 1970 (Est.) 1.0000 0.0 Source: Banco Central del Paraguay, Cuentas Nacionales. PARAGUAY B R A Z I L BOLIVIA Paved roads \EelI Vista ,- s Ft R A 7 I L Gr"vel roads _ Accss ods trom, A,gwnina and B-til r PR oJ.rr Rio d. Jo-il Eortrroas ---( indsPARir - --f -= Main fishing areas San POUIOO Big gate hanting NT/ I clan Pt& tressnr \\\\\Is. Main tourIst areas and Utes | P J Caboleo l urAtZS C ranaaUa 0 * Main entry points \rA r Ferry crossIngs \ Inthra nioncl lotndaries Ce A Co GE , , >, c6rrocoro ! Cerrn Cart 0 20 40 60 0 o f / o A TL A NTIC ttll S.¶rt./ F. OCEAN O ZO 40 60 \/ I 'aR rol URUGUAY ) M2 40 0 \ Paso Horqueto / M n M Mlle, CS / // | \ ' rdu-, / Aires ''0 M,k I..i>z\\ / I P A R A G U A Y one) 6 Horqueto W Tib,gg- hOE unhn~g |/\ rego i1n the Chaco / \\ / / tb q z ; \ C~~~~~~~~~~~~ORDiLLFrRA D)E "B4,5. g "Ok f _ SOIto~ d,e W\ ElA S T E R N C n HorS TEtN \V ~~~P AI R A G U A Y / l \A )QPt. Ros.rio // = ~ \D\) = S , \ B * S , _ _ _ \ ' \N 7O PUe, */ - ° Saeto Adel B. A£COciliO TE R N ki- AE FEBRUARY ~ ~ ~ ~ ~ ~ ~ ~ Pt 1971ni PBD A333B U A Y N~~~~~~~~~~~~~~~~~~~~~~~~~~~~N Clarinda INTERNATIONAL~~Taoor / Ay.l. Col. O.ie ~ ~ ~ ~ ~ ~ ~~~~~~~~~Ct.F d TeNDSI .0~~~~~~~~~~~~~~~~~~~~~ ARGENTINA. t n. o,e// ITERATtNA Formoso FALLS~~~~~~Asn Cl OidoOusACR acial Tab.i~~~~~~~~~~~~~~~~c* y Villaaia 7 0 FaSa \b Boquer6n E. ConSan0 Ignacio j . Des.ochado Col. CaFramn, \~yha A RG E N T I N A FEOSLARY 1971~~~~~~~~~~~~/ 1OBB- 3330