Legal Market Overview
Although the Colorado Party remains in power, with former-president Horacio Cartes ineligible for re-election, 2018 marked a change of administration in Paraguay with Mario Abdo Benítez taking office in August. The new government has since put forward a development plan focused around two primary goals: fighting corruption and boosting human capital. Strides have already been made in this sense with the recent approval of a number of bills aimed at tackling money-laundering, corruption and terrorism-finance; while the labour-sector legal framework has been consolidated with the establishment of an office for the prevention of violence and abuse in the workplace and the introduction of new regulations regarding employer registration.
The ongoing push for reform of the state has also had an impact on the local and international business community. Recent activity in the financial sector reflects a growth in the availability of financing for, and lending to, small and medium enterprises. The M&A market has also registered an upturn, with a greater proportion of larger local business groups taking part in acquisitions, a phenomenon scarce only three years ago. Nonetheless, Paraguay continues to garner attention from foreign investors looking to establish operations in the country. Furthermore, legal reforms and new legislation regarding securities, movable guarantees, simplified shares companies and insolvency (which now gives priority to reorganisation rather than liquidation) should ensure the country remains attractive to international investment.
Paraguay’s economy is on track to maintain a stable growth rate accompanied by ongoing poverty reduction. Despite the progress made towards increased formalisation and diversification of the economy, growth remains vulnerable to volatility in neighbouring states and, particularly, commodity price fluctuations, since agricultural products still comprise the majority of exports. Moreover, the lower-than-expected performance from key trading partners (especially Argentina) took its toll on economic growth in the second half of 2018. Nonetheless, low public debt, paired with fiscal prudence, has kept GDP-growth above the regional average, allowing the government to issue a $500m, 31-year Eurobond in February 2019.
In spite of this slight economic slowdown, the legal market has remained fairly active. In the project finance area, new laws facilitating infrastructure investments signified an increase in mandates related to major public-private partnership (PPP) projects. This trend is expected to continue in the coming year as the government aims to reduce a significant transport infrastructure shortfall. In the corporate transactional sphere, the market was kept busy with major mergers and acquisitions requiring clearance from the National Competition Commission (CONACOM); while on the contentious side, arbitration continues to gain momentum as a dispute resolution option.
The local legal market is relatively stable, with full-service law firms at the forefront of most complex and cross-border matters. Uruguay-based FERRERE arrived in Paraguay over a decade ago and has since established a leading position in the market, although not without stiff competition coming from Estudio Jurídico Gross Brown (which despite 70 years in the market, has undertaken a thorough institutionalisation process), the now fully-fleshed multidisciplinary firm BKM | Berkemeyer and the increasingly-prominent Vouga Abogados. Other law firms with a broad service offering include Meritas-alliance member Peroni Sosa Tellechea Burt & Narvaja (celebrating its 50th anniversary), Moreno Ruffinelli & Asociados, Olmedo Abogados and MERSAN Abogados. Specialised top-tier advice is also provided by boutique firms that tend to predominate in certain practice areas. Estudio Nora Ruoti & Asociados is a leading player in tax matters, while Irún & Villamayor stands out across labour and employment law, Estudio Riera Abogados is a dedicated disputes firm, Zacarias & Fernández is commended for its IP expertise, and SEA Abogados y Consultores Ambientales is entirely devoted to environmental matters.