From Shadows to Sunlight, Paraguay’s Road to Transparency

This article is brought to you in association with IMF Blog Current Paraguayan Finance Minister Lea Giménez Duarte knows first-hand that transparency pays off. In this podcast, Duarte says the changes began after the government passed a transparency law in 2014. “We started to rethink about how we manage resources, and why it’s important for people to know what we’re doing with the resources,” she says. “And this brought about a huge wave of change in many areas, thanks to transparency.” Giménez Duarte discussed transparency and corruption with Christine Lagarde and others during a seminar the 2018 IMF and World Bank Spring Meetings. She says Paraguay went from “managing the resources in complete darkness” to a transparent process where “sunlight came in.” Corruption has a way to hide in small, dark, little spots and spread around very quickly. -Lea Giménez Duarte This enabled the government to redirect resources to the areas that needed them most, she says. For example, social programs increased by about 200 percent in coverage and 250 percent in size, she says. She also credits a fiscal responsibility law and public-private partnerships as major contributors to Paraguay’s improving economy. “I think it’s a no-brainer; we have to do this,” she says. “We will never have enough resources in the public sector alone to finance the infrastructure that the country needs.” Making room in the budget allowed the government to contain the wage bill and put resources in social programs and infrastructure. But passing laws does not immediately win public trust. The entire purpose of having a transparency law is “to build the trust, the social fabric, if you will,” Giménez Duarte says, adding that it is an ongoing challenge, yet one that appears to be heading in the right direction. She says the political dialogue now routinely includes talk of transparency and fighting corruption. “Once it’s out there, I think it’s for good …. civil society is hungry for transparency.” Notwithstanding Paraguay’s success in promoting transparency, Giménez Duarte says IMF support is crucial to the effort. “Corruption has a way to hide in small, dark, little spots and spread around very quickly. And then once you notice it, it’s perhaps too late,” she says. “Therefore, having indicators, having monitoring, and having someone overseeing this with a very ample view and linking it to the macro stability, I think will be very useful.”