Paraguay Keeps Moody’s Investment-Grade Rating as Growth Outpaces the Region

Paraguay · Economy

Key Facts

—Moody’s decision. The agency affirmed Paraguay’s Baa3 sovereign rating with a stable outlook in its regular review dated 23 January 2026.

—Dual investment grade. S&P upgraded Paraguay to BBB- with a stable outlook on 17 December 2025, giving the country a second investment-grade rating.

—Growth projections. Paraguay’s Ministry of Economy and Finance forecasts real GDP growth of 5.8% for 2025 and 4.0% for 2026.

—Fitch’s position. Fitch Ratings maintains Paraguay at BB+, one notch below investment grade, with a positive outlook.

—First upgrade milestone. Moody’s first lifted Paraguay to Baa3 on 26 July 2024, marking the country’s debut investment-grade sovereign rating.

Moody’s has reaffirmed Paraguay’s investment-grade rating at Baa3 with a stable outlook, cementing a macroeconomic story that stands apart in a region still grappling with fiscal drift and political noise.

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What Moody’s actually said

On 23 January 2026, Moody’s published its regular credit opinion on the Government of Paraguay, keeping the sovereign rating unchanged at Baa3 and the outlook stable. The agency cited sustained economic momentum, prudent fiscal management, and a manageable debt profile as the pillars behind its decision.

The Ministry of Economy and Finance in Asunción quickly publicised the document, framing it as validation of a reform path that has survived changes of government. Moody’s first awarded Paraguay the Baa3 badge on 26 July 2024, then reaffirmed it in August 2025, and has now done so again in early 2026.

The growth numbers driving the investment-grade rating

Paraguay’s economy expanded by 4.2% in 2024, according to the International Monetary Fund’s Article IV consultation, and the Ministry of Economy and Finance now projects an acceleration to 5.8% for 2025. That figure places the landlocked nation of roughly 7.5 million people among the fastest-growing economies in Latin America.

For 2026, the official forecast settles at a still-robust 4.0%, reflecting a normalisation after an exceptional agricultural harvest and strong re-exports. The growth is broad-based, spanning soyabean and beef production, maquila manufacturing, construction, and a steadily expanding services sector in Greater Asunción.

A rare dual investment-grade rating in the Southern Cone

Paraguay now holds investment-grade status from two of the three major rating agencies. S&P Global Ratings raised the country to BBB- with a stable outlook on 17 December 2025, aligning it with Moody’s Baa3 and giving institutional investors a second green light.

Fitch Ratings remains the outlier, keeping Paraguay at BB+ with a positive outlook, one notch below investment grade. A Fitch upgrade would complete the trifecta and likely trigger a fresh wave of passive fund inflows, as many global bond indices require two or three investment-grade stamps for full inclusion.

What the investment-grade rating means for investors and expats

An investment-grade rating lowers the government’s borrowing costs and sets a ceiling that benefits Paraguayan banks and blue-chip corporates tapping international debt markets. For foreign direct investors, it reduces the perceived country-risk premium and makes long-term capital commitments easier to justify to boards and compliance committees.

Expats and frontier-market professionals should watch the secondary effects. Cheaper sovereign credit tends to compress mortgage and business-loan rates over time, while the rating anchor gives the central bank more room to manage the guaraní without spooking markets. Paraguay’s territorial tax system and low cost of living already attract a steady stream of European and North American relocators, and the investment-grade label adds a layer of institutional credibility that property developers and residency advisors are quick to market.

Policy anchors that keep the outlook stable

Moody’s stable outlook reflects a fiscal framework that has held through electoral cycles. The government has kept public debt below 40% of GDP, a figure that compares favourably with Brazil’s 85% or Argentina’s triple-digit ratio, and the central bank has maintained inflation within its 4% target band for most of the past three years.

A recently modernised public-private partnership law and the ongoing expansion of the Transchaco highway corridor signal that infrastructure spending is being channelled through structures that limit contingent liabilities. These institutional guardrails matter as much as the headline growth rate in keeping rating agencies comfortable.

Risks worth watching

No rating story is without vulnerabilities. Paraguay remains heavily exposed to agricultural commodity cycles and to the health of its larger neighbours, Brazil and Argentina, which absorb the bulk of its re-exports and provide the river corridors that move its grain to the Atlantic.

A prolonged drought or a sharp downturn in Brazilian demand would test the growth assumptions underpinning the Baa3 rating. Money-laundering risks tied to the triple-border region also remain on the radar of multilateral lenders, though recent Financial Action Task Force reviews have noted progress in compliance.

The Latin America read-through

Paraguay’s quiet accumulation of investment-grade credentials contrasts with the fiscal deterioration seen in parts of the Andean region and with the political volatility that has periodically rattled Chile and Peru. In a continent where sovereign downgrades have outnumbered upgrades in recent years, Asunción is running against the tide.

For global investors scanning Latin America for yield and stability, Paraguay is moving from a niche frontier bet to a more mainstream allocation. The next milestone to watch is whether Fitch follows Moody’s and S&P, a decision that could come within the next twelve to eighteen months if growth and fiscal discipline hold.

Frequently Asked Questions

What does Paraguay’s Baa3 investment-grade rating mean?

Baa3 is Moody’s lowest investment-grade tier, indicating moderate credit risk and adequate capacity to meet financial commitments. For Paraguay, it signals that the sovereign can borrow at lower interest rates and that institutional investors with investment-grade mandates can now include Paraguayan bonds in their portfolios.

Which agencies rate Paraguay as investment grade?

As of early 2026, Moody’s rates Paraguay at Baa3 with a stable outlook and S&P rates it at BBB- with a stable outlook. Fitch Ratings maintains a BB+ rating with a positive outlook, one notch below investment grade, meaning Paraguay currently holds investment-grade status from two of the three major global rating agencies.

How fast is Paraguay’s economy growing?

Paraguay’s Ministry of Economy and Finance projects real GDP growth of 5.8% for 2025 and 4.0% for 2026, following 4.2% growth in 2024. These rates place Paraguay among the top performers in Latin America, driven by agriculture, re-exports, manufacturing, and a growing services sector.