Poorly Timed Concession Unlikely To Progress
BMI View: Paraguay's plans to concession its main airport come at a bad time, as the country continues to be embroiled in the political ramifications from the June 2012 ousting of former President, Fernando Lugo. Paraguay has subsequently been excluded from various regional organisations and we anticipate that things are likely to get worse prior to improving. Given that a stable policy environment is crucial in attracting private infrastructure operators, we see little potential for these plans to move forward in the foreseeable future.
Paraguay's finance minister, Manuel Ferreira, has re-visited plans to employ the private sector for the operation of strategic infrastructure in Paraguay, with Asunción's Silvio Pettirossi International Airport top of the project list. However, the government will need to pass a concessions bill in order to move forward with a tender. Former President Fernando Lugo put a concessions bill to congress in late-2011, but this effort stalled. A new bill is being drafted and hoped to be put to congress in October 2012.
Despite this announcement, we hold little optimism that this plan will move forward, at least over the short term, given Paraguay's political climate. In June 2012, Paraguay's congress impeached the then-President, Fernando Lugo, and replaced him with his deputy, Federico Franco. Many observers have questioned the legality of the move, and Paraguay has been isolated from the region, with its memberships to Mercosur and Unasur suspended. It currently remains in the OAS.
|Short Term Weakness, Longer Term Potential Improvements?|
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