INTERVIEW-Paraguay election hopeful plans to issue debt for infrastructure

by Reuters
Tuesday, 9 April 2013 20:28 GMT

* Ruling party candidate would maintain economic policies

* Alegre says global debt issues could finance infrastructure

* Supports GMO crop technology, would modify farm tax

By Daniela Desantis and Mariel Cristaldo

ASUNCION, April 9 (Reuters) - Efrain Alegre, the ruling party candidate running for Paraguay's presidency, said he will issue more debt abroad to finance infrastructure spending and open up state companies to private capital if he wins the April 21 election.

Alegre, 50, is a lawyer and longtime politician in the center-right Liberal Party, which took over the presidency last year when Congress impeached leftist President Fernando Lugo.

The candidate served as Lugo's public works minister until he was fired in 2011 for revealing too early his plan to run for president of the poor, soy-and-beef-producing country in the heart of South America.

Polls show Alegre is trailing front-runner Horacio Cartes, a wealthy businessman belonging to the powerful Colorado Party, although some surveys show there could be a technical tie. Ideologically, the two candidates are very similar.

In January, the Liberal government took an unprecedented step to tap global debt markets, selling ${esc.dollar}500 million in 10-year bonds that were nearly 12 times oversubscribed.

"We will continue with this policy. External debt is always a positive option as long as it goes toward development in a country like ours, which has low levels of indebtedness," Alegre said on Monday night in an interview at his modest home outside Asuncion, where he greeted Reuters reporters alongside his wife.

"But this is not the only instrument. Paraguay has an immense opportunity to generate investment through public-private alliances," Alegre added. "I want to focus on incorporating private capital and capitalizing some (state companies) to overcome their deficits."

He did not say which companies would be targeted, but he did say he would offer concessions to private companies to run the airports and the Paraguay-Parana riverways, as well as the main highways that remain in state hands.

Attempts during the last decade to privatize some of Paraguay's state-run public services were thwarted by corruption scandals. The country is infamous for its contraband trade and for corruption inside the business and political class.

The economy is seen expanding by 10.5 percent this year after contracting in 2012 as benevolent weather yields a record soy harvest. Paraguay is the world's No. 4 soybean exporter although it lags far behind the top three suppliers.

Alegre said he would seek to modify a tax on farm earnings to shift to a flat 10 percent levy from the current variable rate linked to acreage.

He said the change would contribute more to state coffers, responding to criticism by multilateral lenders that the country's taxation system is too lenient.

In terms of biotechnology, Alegre said he would continue the current government's policy of approving genetically modified strains of soy, corn and cotton to boost production.

"We won't turn our back on technology. The world has developed and technology offers opportunities to small farmers, too. We should be prudent in these matters but also serious, and practical," Alegre said. (Writing by Hilary Burke; Editing by Kieran Murray and Eric Walsh)

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