Populism is having a moment in South America. From Argentina’s chainsaw-wielding Javier Milei to Colombia’s firebrand former rebel Gustavo Petro, many of the continent’s presidents have risen to power by attacking the establishment, promising sweeping reforms, and projecting a larger-than-life personality. The rise of these figures isn’t too surprising for a continent that gave us the mid-century Argentine power couple of Juan and Eva Perón, let alone more recent incarnations such as Venezuelan strongmen Hugo Chávez and Nicolás Maduro. What’s more surprising is which country has resisted this personalist trend.
For over three decades during the Cold War, Paraguay was under the military rule of Alfredo Stroessner, whose cult of personality (not to mention U.S. backing) allowed him to persist while other dictators fell. Today, Stroessner’s Colorado Party remains dominant, but it is under very different management. President Santiago Peña, elected in 2023, began his career as an economist, teaching university classes and working for a stint at the International Monetary Fund. Peña only joined the Colorado Party in 2016, after the “bright young man,” in the words of then-President Horacio Cartes, was named to lead the country’s Finance Ministry.
Since taking office, Peña has eschewed the radical transformations favored by many of his neighbors and instead engaged in the sometimes dull and often thankless task of governmental reform. With majorities in both chambers of the legislature, Peña’s Colorado Party has passed over 20 institutional reforms in the last three years. Paraguay’s new civil service law aims to promote meritocracy and reduce a bloated public sector. A public procurement reform is targeted to reduce opportunities for corruption. Additional reforms have reduced the number of government ministries and consolidated the agencies overseeing tax collection, customs, and social security.
Aside from these governance reforms, the Peña administration has taken steps to shore up the finances of Paraguay’s complex pensions system. In 2024, Congress passed a reform to reduce outlays from the country’s social security administration; ministers and legislators are currently negotiating a similar reform for the public-sector pension system, the Caja Fiscal. Both of these reforms entail significant trade-offs, but Peña and his team have not shied away from the challenge.
Another prong of Peña’s reform agenda is the 2024 Transparency and Anti-Corruption Law, which, among other provisions, creates a digital portal for citizens to report acts of corruption by country officials. The law is a promising, if belated, step in the right direction for a country that places second among South America’s most corrupt countries according to Transparency International, with only Venezuela ranking higher.
Beyond domestic legislation, the Peña government has taken an active role in international trade through Mercosur, a customs union of five countries in South America. Historically, Argentina and Brazil have dominated the bloc and driven it in a protectionist direction, while the smaller member states of Paraguay and Uruguay have unsuccessfully pressed for lower tariffs and more deals with external trade partners. (Mercosur’s fifth member, Bolivia, joined the bloc only two years ago.)
The last few years have flipped that script. Milei’s Argentina has embraced free trade and Lula’s Brazil has softened its stance, providing room for Paraguay to take a more active and assertive role within Mercosur. After more than 25 years of start-and-stop negotiations, Mercosur leaders finally signed a trade agreement with the European Union in January 2026, which is now awaiting approval by the European Court of Justice.
Santiago Peña’s technocratic approach has achieved clear results. Prudent fiscal policies brought Paraguay’s deficit down to 2% of GDP in 2025, compared to 4.1% in 2023. Real GDP growth has been among the highest in the region, reaching 4.4% growth in 2025. Poverty rates have also maintained a consistent downward trend. These achievements, along with the longer-term governance reforms that the Peña administration has implemented, earned Paraguay a sovereign ratings upgrade from both Moody’s and S&P in the last two years, as well as a positive outlook from the third major credit ratings agency, Fitch. Paraguay’s achievements are all the more impressive against a regional backdrop that has seen middling growth rates and falling credit ratings.
To be sure, Paraguay still faces many challenges. Strong macroeconomic trends have yet to pay off in concrete gains for much of the country’s poor and working class. Corruption remains widespread, enabling organized crime, making investment less likely, and creating a culture of public distrust in government. Too many members of the Colorado Party, including sitting legislators and former senior officials, benefit from these corrupt networks, and Peña has had to tread carefully in his attempts to rein them in. Taken together, all these factors help to explain why Peña’s presidential approval rating sits at only 38%. Paraguay would be better off if center-left opposition parties could leverage this dissatisfaction and propose a constructive alternative while building on the progress of recent years. But Paraguay’s opposition remains severely fragmented, and many anti-establishment voters have instead gravitated toward the National Crusade Party, a right-wing populist movement.
Technocrats have successfully guided many South American countries in trying times. Sociologist Fernando Henrique Cardoso served as finance minister and president of Brazil in the 1990s and early 2000s, putting an end to the country’s hyperinflation crisis and launching a series of conditional cash transfer programs that would lift millions out of poverty. Chilean lawyer and economist Ricardo Lagos risked his life to confront the regime of Augusto Pinochet in the 1980s before being elected as his country’s president in 2000. After a six-year term in which he expanded access to healthcare, education, housing, and unemployment insurance amid strong economic growth, he left office with a 70% approval rating. Yet there are just as many technocrats, from Iván Duque in Colombia to Mauricio Macri in Argentina, who have failed in the face of severe challenges.
Paraguay offers a test of whether technocratic governance can work in South America today. Will Santiago Peña be able to deliver, or will dissatisfied voters instead turn toward populism like so many of their neighbors?
Robert Carlson is a fellow at Global Americans. He served as the Lead Researcher for the organization’s latest publication on Paraguay’s governance reforms, investment agenda, and sovereign ratings.
