Difficult political environment and weak institutions Lack of economic diversification Low debt burden Improved external indicators as a result of increased exports and rising international reserves The ratings on the Republic of Paraguay reflect its solid fiscal position, low debt burden, and improved external indicators. Standard&Poor's Ratings Services expects the central government to have a fiscal deficit of less than 1% of GDP in 2012 after running surpluses since 2004. However, we expect the central government to return to a balanced budget in 2013, helped in part by the introduction of a personal income tax. The fiscal position has resulted in a steadily declining general government debt burden, which we project will reach 14% of GDP in 2012.
