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Paraguay's Unpaid Public Works Bills Are Freezing Its Construction Engine
(MENAFN- The Rio Times) Imagine you build highways, bridges and schools for a government that simply stops paying its bills. That is the reality many construction firms face in Paraguay today – and it is quietly turning a success story into a warning sign.
Industry associations say the state owes more than $200 million in approved public-works contracts, and well over $300 million once interest is added. For big contractors, that is the difference between running several projects at once and shutting down work fronts.
For small firms and suppliers, it is often the difference between survival and collapse. Luis Lavigne, who heads major supplier Concasa, describes once-solid clients who can no longer pay for cement, steel and bricks because the state has frozen their cash flow.
Work sites that were at 100% capacity are now down to 50–70%. Hundreds of workers have already lost their jobs. Some builders have stopped buying materials altogether because they have effectively left the market.
The government insists it is paying off debts inherited from previous administrations and working through the backlog. The companies respond that interest keeps piling up, new work keeps being certified, and nobody can say clearly when the money will actually arrive.
Without a transparent payment calendar, they cannot negotiate realistically with banks or suppliers. Behind the dispute lies a deeper question about how Paraguay wants to be seen.
When payment doubts threaten a“stable” growth story
On paper, it is one of Latin America's faster-growing economies, with roughly 4% growth and an investment-grade label. It sells itself as a predictable, business-friendly place in a volatile region.
But if contractors start to believe that“do the job, get paid” no longer holds, that stability narrative begins to crumble. For expats and foreign investors, the lesson is simple: watch how a country treats the people who build its infrastructure.
When private developers, not the state, are the only ones keeping cranes moving and workers employed, something fundamental in the contract between government and real economy has gone off the rails.
Industry associations say the state owes more than $200 million in approved public-works contracts, and well over $300 million once interest is added. For big contractors, that is the difference between running several projects at once and shutting down work fronts.
For small firms and suppliers, it is often the difference between survival and collapse. Luis Lavigne, who heads major supplier Concasa, describes once-solid clients who can no longer pay for cement, steel and bricks because the state has frozen their cash flow.
Work sites that were at 100% capacity are now down to 50–70%. Hundreds of workers have already lost their jobs. Some builders have stopped buying materials altogether because they have effectively left the market.
The government insists it is paying off debts inherited from previous administrations and working through the backlog. The companies respond that interest keeps piling up, new work keeps being certified, and nobody can say clearly when the money will actually arrive.
Without a transparent payment calendar, they cannot negotiate realistically with banks or suppliers. Behind the dispute lies a deeper question about how Paraguay wants to be seen.
When payment doubts threaten a“stable” growth story
On paper, it is one of Latin America's faster-growing economies, with roughly 4% growth and an investment-grade label. It sells itself as a predictable, business-friendly place in a volatile region.
But if contractors start to believe that“do the job, get paid” no longer holds, that stability narrative begins to crumble. For expats and foreign investors, the lesson is simple: watch how a country treats the people who build its infrastructure.
When private developers, not the state, are the only ones keeping cranes moving and workers employed, something fundamental in the contract between government and real economy has gone off the rails.
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