Paraguay : Request for Stand-By Arrangement-Staff Report; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Paraguay

The authorities' program for 2003-05, supported by the previous Stand-By Arrangement (SBA), successfully stabilized the economy despite difficult conditions. A new economic program for 2006-08 is needed to consolidate macroeconomic stability, address remaining vulnerabilities, and create the conditions for higher growth. In the context of a benign environment, inflation fell significantly to 2¾ percent in 2004-the lowest inflation rate since the early 1970s. The return of capital flight in 2004 satisfied increases in the demand for money and generated a rapid growth of monetary aggregates.