Policies that sustain macroeconomic stability should support Paraguay's GDP growth prospects, despite the temporary shock this year. The intense drought will take a toll on the economy, weaken the current account balance, and delay fiscal correction, but damage to Paraguay's economic fundamentals should be limited. We affirmed our 'BB/B' long- and short-term sovereign credit ratings on Paraguay. The outlook is stable, reflecting strong medium-term growth prospects, fiscal prudence, weak but slowly maturing institutions, low per capita income, and high vulnerability to droughts and volatile commodity prices. On May 18, 2022, S&P Global Ratings affirmed its 'BB/B' long- and short-term foreign and local currency sovereign credit ratings on Paraguay. The outlook remains stable. Our transfer and convertibility assessment remains 'BB+'. The
