Paraguay voters gave the conservative Colorado Party a third straight mandate to run the nation, defying a trend that booted out incumbent governments elsewhere in Latin America.
(Bloomberg) — Paraguay voters gave the conservative Colorado Party a third straight mandate to run the nation, defying a trend that booted out incumbent governments elsewhere in Latin America.
Santiago Pena, a 44-year-old former finance minister topped his closest rival in a crowded field by 16 percentage points, according to the latest tally after Sunday’s election. Efrain Alegre, a former public works minister leading a coalition of leftists and conservatives, conceded after winning about 27% of the vote. Anti-establishment candidate and ex-senator Paraguayo Cubas received 23% of ballots.
The results make Paraguay an outlier in a region where angry voters in countries including Chile and Colombia dumped more traditional parties in recent years to embrace left-wing candidates who promised change. While polls had shown a tight race between Alegre and Pena, the incumbent had an advantage in Paraguay, where the two main opposition candidates split the vote. Unlike many countries in Latin America that hold a runoff election if the leading presidential candidate doesn’t get a majority of the vote, Paraguay requires only a plurality to win.
The Colorado Party, which has governed in dictatorship and democracy for the better part of 80 years, also won majorities in the Lower House and Senate, newspapers ABC and Ultima Hora reported. Pena, who starts his five-year term Aug. 15, called on Paraguayans to put aside their differences and work together to improve living standards.
“We have a lot to do after the recent years of economic stagnation, worrying levels of unemployment and the increase in the poverty rate,” he said in a televised address to supporters. “The task that awaits us isn’t for a single person or party.”
The country’s $1 billion of overseas bonds due in 2031 gained Monday, adding about 1 cent to 97.6 cents on the dollar as of 11:34 a.m. in New York. The yield fell to 5.27%
Read more: Paraguay General Election to Spotlight China, Corruption
Pena inherits an economy that averaged paltry annual growth of just 1.2% in the past five years due to the pandemic and droughts that slashed key exports of soy and hydro power. Poverty, which still hasn’t returned to pre-pandemic levels, affects about a quarter of this California-sized country’s 7.5 million people.
Pena promised to spend more on social programs, infrastructure and housing while leaving the country’s notoriously low tax rates unchanged. The new administration will get a tailwind from a strong soy harvest, with the central bank forecasting 4.5% growth in 2023.
The new government faces limited spending room because of significant debts with government suppliers and a fiscal deficit that is above the 1.5% legal ceiling, according to Wildo Gonzalez, the chief economist for Paraguay at brokerage Puente. Pena will have to overhaul the civil servant pension system and raise taxes to narrow the gap, he said.
The president elect also faces the challenge of stepping out of the shadow of his political mentor Horacio Cartes, an ex-president who is now the Colorado Party chairman. Cartes, one of Paraguay’s wealthiest businessmen, is under US financial sanctions for alleged corruption and ties to terrorism.
“It’s going to be difficult for Pena to demonstrate that he has autonomy, that he is the one who calls the shots,” Gonzalez said. “Pena will have an agenda that shows he is in charge and leading reforms.”
Paraguay’s alliance with Taiwan, which gave Sunday’s vote outsized geopolitical importance, looks safe for now. Pena pledged on the campaign trail to preserve the relationship with the self-governing island nation that China claims as a renegade province, which in practical terms means his country can’t directly sell its soy and beef to China.
Read more: Why Paraguay Vote Matters to US-China Rivalry
But China is already one of Paraguay’s top trading partners because the South American country imports so much of its consumer goods, industrial machinery and equipment, according to Fernando Masi, the director of local think tank Cadep.
“Sooner or later Santiago Pena or whoever comes after him will establish diplomatic ties with China,” Masi said. “Not having relations with China is like not having relations with Japan, the EU or the US.”
–With assistance from Patrick Gillespie and Maya Averbuch.
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