Geoeconomic and policy analysis
2026-04-26
10 minute read
25 sources
Paraguay Under Pena: Itaipu Renewal, Investment Grade, and the Mercosur Arbitrage
Santiago Pena's Colorado government is converting a low tax, low debt, hydropower surplus economy into a credible investment grade story. The 2024 Itaipu Anexo C settlement at 19.28 dollars per kilowatt locked in a five year transition, Moody's upgraded sovereign debt to Baa3 in March 2024, and beef plus soy exports lifted GDP by 4.7 percent. The remaining bet is whether Pena can hold the Mercosur EU FTA window open, sustain Taiwan diplomatic ties against PRC pressure, and keep the Cartes faction inside the rule of law perimeter the United States redrew when OFAC lifted Section 7031c sanctions on December 26, 2024.
Santiago Pena Palacios was inaugurated on August 15, 2023, after winning the April 30, 2023 election with 42.74 percent against Efrain Alegre's 27.49 percent, returning the Asociacion Nacional Republicana to the presidency with a Senate and Chamber majority anchored by the Honor Colorado faction of former president Horacio Cartes. The Ban...