Paraguay - Domestic policy



González Macchi's cabinet appointments indicated that management of the economy would be a shared responsibility of all three parties. That was clearly the central priority of the new government, which faced severe funding problems.

Nearly all of Paraguay's roadwork was put on hold due to the lack of funds. Even the country's externally funded projects were delayed because of the political crisis. Following the Colorado Party's traditional stance, González Macchi quickly distanced himself from a pure free-market philosophy toward economic development, indicating the need for government intervention in regulating the economy. The new government's pledge to privatize the state-owned water, electricity, and telephone companies did not materialize because of the political conflict that surrounded his presidency. Then plans announced to restart stalled projects and reinvigorate the economy through a series of investments and loans aimed at public works, agriculture, industry, and low-cost housing were also mostly put on hold as the executive-legislative conflict consumed most of the president's time. The government was never able to move to address high unemployment, the legacy of corruption from Wasmosy's presidency, and banking sector reform.

In December 2000, with some pressure from the World Bank, González Macchi agreed to implement the country's first anticorruption program. The action plan for the program was designed through the collaboration of the government, the World Bank, and U.S. Agency for International Development (USAID). Yet, little progress has been achieved and most analysts are now dismissing González Macchi's period as a lost opportunity.

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