From 1990 until 1998 the government of Paraguay placed a peg on its currency, the Guarani (PYG). This helped to reduce inflation in the country by 40 percent over the course of the decade. Since the peg was lifted, the Guarani has consistently depreciated relative to all of the major currencies. Political corruption has been a major problem in Paraguay throughout its history and it has caused inflation to rise again, leading to the continuous weakening of the Guarani.
B3, 09 Apr 2008
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What does it look like?
The Republic of Paraguay is divided into 18 departments. The government, based on the constitution drafted in 1992, is divided into three branches: the executive, the legislative and the judicial. The executive branch consists of the President and a cabinet called the Council of Ministers, which he nominates. The executive branch is a bicameral congress consisting of the 45-member Chamber of Senators and the 80-member Chamber of Deputies. Each house holds elections every five years. The judiciary is the Supreme Court of Justice whose members are appointed on the proposal of the Council of Magistrates.
Chief of State President Fernando Armindo LUGO Mendez (since 15 August 2008); Vice President Federico FRANCO (since 15 August 2008); note - the president is both the chief of state and head of government
Head of Government President Fernando Armindo LUGO Mendez (since 15 August 2008); Vice President Federico FRANCO (since 15 August 2008)
Cabinet Council of Ministers appointed by the president
Elections president and vice president elected on the same ticket by popular vote for a single five-year term; election last held 20 April 2008 (next to be held April 2013)
Election Results Fernando Armindo LUGO Mendez elected president; percent of vote - Fernando Armindo LUGO Mendez 40.8%, Blanca OVELAR 30.6%, Lino OVIEDO 21.9%, Pedro FADUL 2.4%, other 4.3%
Key Economic Factors
Paraguay has no known oil or natural gas reserves, resulting in a heavy dependence on neighboring countries. The nation is a huge importer of hydroelectric power and a part of a Latin American Trade Coalition called Mercosur, which ties the Paraguayan economy with that of Brazil, Argentina, and Uruguay. Paraguay relies heavily on imports for oil and is thus very sensitive to increasing crude oil prices. Although the nation pays subsidized oil prices, Paraguay is under pressure to deregulate oil monopolies, which may result in price increases. Paraguay's economy is predominantly agricultural. The government relies heavily on exports of soybeans, cotton, grains, cattle, timber, and sugars, and thus the economy is extremely sensitive to seasonal and weather fluctuations.