Market overview

After two years of recession, caused by drought in 2019 and the covid-19 pandemic in 2020, Paraguay’s economy seems to be on the rebound: the country’s GDP...

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After two years of recession, caused by drought in 2019 and the covid-19 pandemic in 2020, Paraguay’s economy seems to be on the rebound: the country’s GDP grew by 4.2% year-on-year in 2021 and the economy is also expected to grow a modest 0.3% in real terms in 2022. This is evidence that Paraguay has recovered (albeit tentatively) from recent economic woes. Inflation is, however, expected to reach 9.4% in 2022 due to higher global food and fuel prices, a real blow to the estimated 16% of Paraguayans living in poverty.

Nevertheless, there are a good number of lawyers in Asunción who understand the needs of both prominent Paraguayan companies and international companies, and during the past decade law firms have had ample opportunity to build their experience in sophisticated legal work. In 2022, the trend continued. Firms helped a Paraguayan road project issue bonds worth US$220 million to refinance an existing credit line, assisted local company Nyne Waters with the acquisition of water assets from multinational retailer Indusur and helped IDB Invest issue bonds to support small and medium-sized enterprises.

But given that Paraguay has one of Latin America’s smaller economies (and indeed populations), demand for deep specialisations is still low, and the few firms capable of delivering expert services compete fiercely for relatively few deals. On more daily matters, firms have sound offerings in the core areas of corporate, banking and litigation. There are lawyers with extensive experience in tax, intellectual property and labour. A handful of firms have solid project finance and infrastructure experience that has increased with the new public-private partnerships (PPP)  legislation, while the growing demand for white-collar crime and compliance services is on a growing number of firms’ radars.

Paraguay’s business-friendly President Mario Abdo Benítez is set to finish his term in office in 2023. He will not stand for election again, as the country’s constitution limits presidents to one term in office. The president, known locally as Marito, has survived several political crises; in 2019 he presided over ill-fated negotiations with Brazil over an energy contract involving the hydroelectric power station Itaipu. More recently in 2021, protesters took to the streets of Paraguay, accusing his administration of mishandling the covid-19 pandemic, and of governing incompetently. Allegations hang over the administration, as many suspect corrupt practices during the acquisition of medical supplies.

The issue of corruption extends beyond the incumbent administration. As a sign of how complex the situation is, in July 2022 the US Department of State designated former Paraguayan President Horacio Cartes (and prominent member of the governing Colorado Party) ineligible for entry to the United States “due to his acts of corruption while in office”. It is, therefore, no surprise law firms in Paraguay are looking to add white-collar crime and compliance services.

Meanwhile, Paraguay remains an attractive prospect for investors, who are interested in the country’s infrastructure programme and the potential for oil extraction in the Chaco region. The government has introduced several legislative changes to bring in more foreign companies. These include laws for PPPs and reforms to stabilise the country’s tax regime with investment guarantees.

Paraguayan law firms have made concerted efforts to promote the opportunities brought by such reforms. For example, they have extolled the benefits of the country’s maquila law and advantageous customs rules to manufacturers in Brazil and Chile. They strive to foster foreign direct investment by seeking to change national perceptions, suggesting model legislation for important sectors and helping to clean up the country’s image. Law firms also acknowledge the need for an internationally recognised approach to providing legal services, and multiple members of this chapter are undergoing modernisation drives.

Law, firms will also do what they can to make doing business as easy as possible for clients. They cater to clients by providing companies with all that they need to set up operations in the country, from office space, to board directors, to accounting services.

The law firms listed in Paraguay are small by Latin American standards. They are all based in the capital Asunción and predominantly local, with only one foreign firm, Uruguay’s Ferrere, which has had an office in Paraguay since 2003.

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