Global Economic Times

Paraguay's Construction Industry Expresses Concern over Reduced Infrastructure Investment in 2026 Government Budget: Pedro Espinola Special Correspondent / Updated : 2025-09-15 12:57:35

Despite recent vigorous construction projects in the residential, corporate, and industrial sectors, the construction industry is increasingly concerned about the reduction in infrastructure investment included in the 2026 National General Budget (PGN). Major construction organizations, including the Paraguayan Association of Road Builders (Cavialpa), the Paraguayan Chamber of Construction (AproCons), and the Paraguayan Chamber of Developers and Builders (Capadei), have pointed out that the industry is currently facing a "dual reality." While the private sector continues to show steady growth, the public infrastructure sector is caught in a vicious cycle of shrinking budget execution and delayed payments.

The construction industry views the 2026 budget proposal as a crucial turning point that will determine the future direction of the industry. They warn that cuts to the infrastructure budget could lead to a contraction in public works, delayed payments, and increased debt to contractors, which could even threaten the private sector that is currently driving employment and demand. They emphasize that the government must implement a balanced policy that ensures the sustainability of public infrastructure investment while maintaining fiscal health.

Paul Sarubbi, president of Cavialpa, expressed concern that even if the infrastructure budget cuts are a measure to meet the 1.5% fiscal deficit target of the Fiscal Responsibility Law, they will directly impact the entire construction industry, its workforce, and the related supply chain. He noted that Paraguay's infrastructure gap amounts to $30 billion, and to close it, at least $2 billion needs to be invested annually, an amount far short of current investment. He added that without investment in roads, energy, water and sanitation, and educational facilities, Paraguay will lose its competitiveness in attracting foreign investment and boosting regional productivity.

As an alternative, Cavialpa proposed increasing the efficiency of public spending and actively utilizing private financing methods such as Public-Private Partnerships (APPs), turnkey projects, and international loans. "The government must increase efficiency and reduce current expenditures year by year to secure the capacity for infrastructure investment," Sarubbi stressed.

Pablo Rivarola, president of AproCons, stated that while there was vigorous activity in both the public and private sectors until the first half of this year, the pace of public works has slowed significantly in the second half, and several projects have not yet commenced. He anticipates that the government's non-payment of dues is affecting the entire construction industry and that this trend will continue into next year due to the 2026 budget adjustments.

Rivarola expressed concern that "it seems infrastructure investment, including in critical areas like education and health facilities, is being sacrificed to meet the fiscal deficit," and that the government's short-term financial goals could undermine the nation's long-term competitiveness. The construction industry is once again urging the government to make a wise decision during the budget review process, emphasizing the importance of infrastructure investment.