March 13, 2020 / 7:48 PM / a month ago

Paraguay cuts interest rate to mitigate coronavirus impact

ASUNCION, March 13 (Reuters) - Paraguay’s government announced on Friday that it would cut its interest rate by 25 basis points as part of a range of measures to mitigate the impact of the spread of coronavirus that is rattling global markets and threatening economic growth.

President Mario Abdo said in a message to the landlocked nation that the country would cut the benchmark interest rate to 3.75% and lower the level of required reserves so that the financial sector could refinance its debts.

Paraguay suspended mass events and activities in educational, religious and sports institutions for 15 days on Tuesday to contain the spread of the virus. The country has six confirmed cases to date.

The government also announced credit lines in state banks and loans from multilateral organizations for $150 million. Abdo also announced some tax relief measures.

“These are the first measures that we are taking in these 72 hours in the economic field. We believe that they will be important tools to face an eventual slowdown in the economy, a slowdown in consumption,” Abdo said.

Paraguay is targeting growth of around 4% in 2020, an expansion driven primarily by a strong soybean crop. In 2019, the economy grew just 0.2%.

The projection of growth for the year will be maintained, central bank head José Cantero said at the same conference, although he clarified the figure should be revised in April. (Reporting by Daniela Desantis; Writing by Adam Jourdan Editing by Chizu Nomiyama)

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