Government / Politics
On March 7, Paraguay confirmed the first case of COVID-19 virus. On March 10, the government suspended all school classes, cinemas, casinos, group meetings and events and on March 16 declared state of emergency for the country. The government then applied a curfew from 8pm to 4 am and finally on March 21, ordered a complete lockdown up to May 3, if not extended. Borders were closed on March 24, allowing ever since the return of nationals subject to a mandatory 14-day quarantine. This does not include cargo service airplanes, circulation of aircrafts providing medical and relief services and the repatriation of foreign citizens during this term.
The government has also cut wages and other benefits from the public sector and Binational entities (Itaipu and Yacyreta hydroelectric dams) as part of the measures to mitigate the impact from the coronavirus crisis and redirected proceeds to the Ministry of Health.
Lockdown
Residents may only leave their homes to purchase groceries and medicine on certain days depending on the number of their license plates. Some individuals and companies are exempted from the lockdown such as: authorities fulfilling their duties, public and private health services providers, doctors and nurses, police and military, journalists; supermarkets and the logistic chain for the provision of food, medicine and hospital tools; basic public services, execution of public works; gas stations, delivery services; services that the Central Bank deems necessary for the function of the banking and finance system; logistic chain that includes ports, airports, river ships, maritime and land freight transportation, customs services for loading and unloading merchandise; agricultural, poultry, fishing and forestry production, as well as the logistics for the provision of supplies, machinery and their assistance services; essential services of surveillance, cleaning and accommodation. Those individuals included among the exceptions must comply with COVID-19 protocol (must not be in the risk group, social distancing, hand sanitizing and wearing masks). In general, the population has willfully complied with the quarantine measures and those that haven’t have suffered penalties. The government is currently studying a flexibility plan for the quarantine which would be executed in stages with a timetable. One of the sectors that will not resume activities immediately is the education sector. Schools will not resume before September 1, if at all in 2020.
Economy
A usually divided Congress approved emergency legislation (Covid-19 Health Emergency Law) that included authorizing $ 1.6 billion for COVID related projects, social subsidies and designed to inject liquidity into the economy. The World Bank suggested that the global recession is likely to lead to a Gross Domestic Product decline of 1.2% this year. There are several subsidies in place. Programs, called Ñangareko and Pytyvo, aim to benefit the informal worker sectors with a two-time payment of USD 80 subsidy per family. The subsidy for formal workers will be provided by the Instituto de Prevision Social (IPS) who oversees the mandatory health and retirement program of formal workers. IPS received USD 100 million from the government to pay for financial compensation of USD 172 to workers whose employers have ceased or suspended their activities due to the pandemic. The compensation will be a one-time payment to workers who earn up to two minimum monthly wages (approx. USD686). This subsidy will reach approximately 505,000 workers. Within the Covid-19 Health Emergency Law, two mechanisms were established to reach the micro-enterprise and small business sector with loans at low rates and flexibilities. One of the main tools is the increase of funds for the Fondo de Garantías a las Pymes (Fogapy) which has an additional USD 100 million, that translates into credit possibilities of up to USD 500 million. Through Fogapy, a financial instrument, banking entities can request the government the necessary guarantees to offer loans to Small and Medium-sized Enterprises (SMEs), reducing the normal time to access to loans in the financial market. The second mechanism established is the creation of a trust fund especially aimed at the micro-enterprise sector. This trust covers startups that take loans between USD 2000 to USD 8000 to be offered through credit and production cooperatives.
Taxes
The law authorized the Executive Power to rule for the extension of deadlines for filing tax returns and payment for 2019 and 2020 periods. On the other hand, the law suspends the application of new tax refunds of tax credits, as well as the resolution of those that are in process.
Labor
The Ministry of labor has passed several regulations and recommended companies to allow employees to work remotely, allowing employers the possibility to grant advance vacation days to employees and reduce hours of work in agreement with employees. The government encourages companies, when necessary, choose to suspend employment over terminating. Employers may suspend employment agreements on several grounds as established in the Labor Code including “force majeure”. The maximum term for suspension is of 90 consecutive days. All workers must comply with the mandatory lockdown, except for those who have been named as exceptions by law. In this case, authorized workers must carry a work certificate issued by the employer and present it at checkpoints and they must necessarily wear masks on public transportation. Masks must be provided by the employer. At the workplace, employers have the overall responsibility of ensuring that all practicable preventive and protective measures are taken to minimize health risks. Workers in the risk group (over 60 years, pregnant or lactating mothers, those with severe respiratory diseases and underlying diseases) are not allowed to work, except from home.
Maritime
The logistic chain that includes ports, airports, river ships, maritime and land freight transportation, and customs services for loading and unloading merchandise are among the exceptions to the lockdown. Moreover, the competent authority overseeing these sectors have taken measures to deal with the Covid-19 situation. The Merchant Marine has provided exceptional measures to enable private ports, vessels and maritime related industries to work during this period and the Coast Guard has extended the validity of all statutory certificates that were to expire, until June 30, 2020.
Insurance
As another measure to mitigate the Covid-19 outbreak, all Reinsurance Licenses validity have been extended until June 30, 2020. The obligation of Insurance Companies to set accounting provisions called “debtor for premiums” has been suspended until June 30, 2020.
Judicial Proceedings
The terms of the processes that are handled electronically follow their normal course. However, terms of procedures that are handled manually are suspended, until the quarantine is lifted by the authorities or the Supreme Court rules otherwise.
Health
The Ministry of Health has been calling the shots and with the early lockdown has kept a low number of COVID-19 infections and deaths (228 infected and 9 deaths until yesterday). A certain under-reporting exists, but the absence of healthcare systems saturation indicates there is currently no exponential community transmission. However, Paraguay has one of the lowest test rates for the virus, with 16.32 test per MM inhabitants. There are also problems in purchasing and receiving ventilators and general protective equipment for medical personnel. On a more positive note, two contingent hospitals with 100 beds each, have been built in record time.
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