Paraguay has become one of the most dynamic economies on the continent, with annual economic growth rates well above the OECD and Latin American averages. Thanks to a strong macroeconomic performance and to important structural reforms, many Paraguayans have overcome poverty and the size of the middle class has grown significantly.

The government of Paraguay has identified public governance reform as an important tool for implementing the objectives in its National Development Plan (NDP) “Building the Paraguay of 2030” (Construyendo el Paraguay del 2030). This multi-year, multidimensional strategic plan, formulated in 2014, aims to address the country’s key challenges and articulates the government’s strategic long-term development vision. The NDP frames the engagement of the executive branch with other levels of government, civil society, the private sector and the legislative and judicial branches. The NDP seeks to create a “democratic, supportive state, subsidiary, transparent and geared towards the provision of equal opportunities”.

Paraguay, a landlocked country with a population of just under 7 million people, is situated in the heart of South America. One of the last of the continent’s countries to overcome dictatorship, Paraguay began a slow move towards democracy in 1989. Notwithstanding Paraguay’s difficult past, the country has become one of the most dynamic economies in the region, with annual growth rates well above the OECD and Latin American averages. Thanks to a strong macroeconomic performance and to important structural reforms, many Paraguayans have overcome poverty and middle classes have started to emerge.

This introductory chapter provides an overview of the economic, social and administrative context for public governance reform in Paraguay. It places the country’s reform efforts in the context of a history marked by a long dictatorship and a democratization process that only started in 1989. Through this contextualisation, the chapter aims to provide the basis for an understanding of the most pressing public governance challenges the country is facing. It finds that Paraguay’s strong macroeconomic performance, improving socio-economic indicators as well as the ambitious National Development Plan provide a major opportunity for reforms, but also flags that low levels of citizen trust and inequalities as well as a lack of inclusiveness remain key challenges that need to be addressed through a public governance reform agenda that is integrated into the development strategy to foster inclusive growth.

This chapter assesses the capacity of Paraguay’s Centre of Government to sustain whole-of-government co-ordination across administrative silos, notably for multi-dimensional policy-setting and implementation; strategic planning; decision-making; and monitoring and evaluation. It notes that Paraguay has made substantial progress in recent years in developing strategic planning as an instrument for systematic whole-of-government co-ordination. Despite this progress, the chapter flags institutional challenges that affect Paraguay’s Centre of Government institutional leadership and co-ordination capacities: the fragmentation of the Executive branch, the numerous institutions at the Presidency and the existence of limited or non-functional co-ordination instruments for high-level policy discussion and decision-making.

Paraguay has developed interesting practices for ensuring alignment of annual budgets and capital expenditure with strategic policy objectives, such as the formulation of a national development plan with a long term planning horizon, reforming the budget structure and setting annual targets at the institutional level. Despite these improvements, the country faces challenges respecting the sustainability of such reforms and the need to complement these efforts with more developed performance-budgeting and robust medium-term budgeting frameworks.

This chapter provides an overview of current political, administrative and financial situation of Paraguayan subnational governments and the main multi-level governance mechanisms in Paraguay. The first section presents an overview of subnational capacities in the context of Paraguay’s decentralisation process, highlighting the existence of fiscal and public management challenges, while the second section focuses on the existing mechanisms for multi-level co-ordination. It assesses the National Development Plan as a planning instrument for multi-level governance and territorial development. The chapter formulates recommendations to implement decentralisation and multi-level governance reforms through a comprehensive and integrated approach.

This Chapter takes stock of recent efforts by the Government of Paraguay to professionalise its public workforce, to improve the efficiency and impact of public spending. The chapter situates recent reforms within the institutional and legal context of public employment in Paraguay, and discusses the use of technological solutions to make civil service employment and reform more transparent and meritorious. The chapter concludes with concrete recommendations to ensure that recent reforms are embedded in new ways of working, and suggests additional reforms in the areas of civil service recruitment, pay, strategic people management, and leadership.

This chapter assesses Paraguay’s open government strategies and initiatives within the broader context of the ongoing public sector reform agenda. It benchmarks Paraguay against OECD standards, principles and instruments, most notably the ten provisions of the 2017 OECD Recommendation of the Council on Open Government. The chapter recognises the Technical Planning Secretariat as the key actor for the co-ordination of open government strategies and initiatives in Paraguay and identifies a number of significant achievements, including the incorporation of open government principles in Paraguay’s 2030 National Development Plan, the creation of Municipal Development Councils as well as the country’s ambitious Open State agenda. The chapter also finds that there is a need to foster the institutionalisation of Open Government and guarantee the sustainability of ongoing efforts, including by reforming the National Open Government Roundtable and by improving the monitoring and evaluation of open government strategies and initiatives.