Home Politics As Intraparty Fighting Dies Down, Paraguay Appears Set for Continued Growth

As Intraparty Fighting Dies Down, Paraguay Appears Set for Continued Growth

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Written By: Miles Pearson – Forex Focus

With the Paraguayan general elections taking place in April 2018, the field of candidates is starting to take shape. The incumbent, President Horacio Cartes, has advised that he will not be running for re-election. His announcement came on the heels of wide-scale protests following an attempt to amend the constitution to eliminate presidential term limits that would have barred Cartes from re-election. Paraguay, one of only three Latin American countries that bar presidential re-election, instituted the term limits in 1989 when the country escaped the grip of a decades-long dictatorship. The demonstrations against the constitutional-reform proposal resulted in protestors setting the Congressional building ablaze, and one opposition protestor dying from clashes with police.

The country’s 125-member legislature will simultaneously be elected on a nationwide basis the same day. The election effectively leaves the country’s fortunes up for grabs to whatever party can take control on election day. The ruling Asociación Nacional Republicana – Partido Colorado (ANR – PC) coalition—commonly referred to as either the Colorado Party, or the ANR—held power over the country for 61 years, including Paraguay’s dictatorial decades. In 2008, it lost power to the Frente Guasú (FG) and its presidential candidate, Fernando Lugo. Former President Lugo, previously a Roman Catholic priest and bishop, was impeached in 2012 through a process that many neighbouring countries viewed as a coup d’etat. The country was suspended from the Common Market of the South (Mercosur) until a democratically elected president took office. In 2013, former tobacco mogul Horacio Cartes swept into office with the conservative Colorado Party and implemented a slate of market-friendly policies.

At present, two parties head the nascent presidential race. The first is the Colorado Party headed by President Cartes—the long-time establishment party and the party to beat in these upcoming elections. The second is the Partido Liberal Radical Auténtico (PLRA) headed by Efraín Alegre. While early polls suggest that the candidates with the highest potential for election are former and current presidents Fernando Lugo and Horacio Cartes (respectively), their absence from this race leaves the selection to a barely forming electoral field. An early poll showed that Alegre was the candidate of choice for many people, but his popularity as an individual may not be enough to trump the juggernaut of the Colorado Party.

Analysts maintain that a coalition that could defeat the Colorado Party at the ballots will fail to materialize. While the leading Colorado Party has undergone some internal strife, there appears to be a proper candidate forming in Mario Abdo Benítez—oft-referred to as Marito. Dissent had sparked around the controversial notion that Santiago Peña, the current finance minister, would be the Colorado Party’s presidential candidate in 2018. Party leaders insisted that, were this the case, they would instead back current Vice President Juan Afara. Afara, upon learning of Peña’s candidature, split from Honor Colorado, which is the intra-party movement he helped found and which currently controls the presidency, to form a separate movement: Sumando Colorados. Shortly after, he merged his movement with another splinter group formed by Marito: Colorado Añetete. The vice president effectively threw his support behind Marito, and, with the support of the party leadership and the strength of the party at the ballots, it appears he will be the candidate to beat in April.

With the current vice president and much of the Colorado Party leadership in his camp, a continuation of current policies is set to take hold in a Marito presidency. While much of the South American region suffered from the 2014 downturn in global commodity prices, Paraguay has been an island of economic growth. Due, in part, to the country’s growing manufacturing industries, Paraguay has benefitted from its lower wages, business-friendly tax structures, and proximity to larger markets such as Brazil and Argentina. Recovering soy prices, along with growing economic diversity and a spate of infrastructure projects, all contributed to this year’s 5 percent year-on-year growth.

Though various factors bolster the country’s resilience, external factors still loom large. The economic downturn in Brazil—Paraguay’s largest trading partner, followed closely by China and Argentina—could cause substantial distortions in exports and gross domestic product (GDP). Brazil accounts for 31 percent of Paraguay’s exports, and the next government will have to employ much of its historically prudent policymaking to maneuver these challenges. Marito’s stated policy goals appear to follow the direction pursued by Cartes’ government. However, the slew of politicians and legislators looking to join Marito’s Colorado Añetete might alter the policy direction somewhat. Marito has yet to publicly release a fully developed platform, so it is difficult to gauge his exact plans; but it seems safe to assume that he will seek to prioritize the stability of the past few years.

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