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 administration has since put forward a development plan focused around two imperative goals: fighting corruption and boosting human capital. Strides have already been made in this sense with a number of bills aimed at tackling money-laundering, corruption and terrorism-finance approved, recently; while the labour-sector legal framework was 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 recent push for state reforms has also had an impact on the local and international business community. Recent activity in the financial sector reflected a growth in the availability of financing for, and lending to, small and medium enterprises. The M&A market also registered an upturn, with a greater proportion of large local groups taking part in acquisitions, a phenomenon scarce only three years ago. Nonetheless, Paraguay continues to garner attention from foreign investors which consistently look to set up operations in the country. Furthermore, the amendment and creation of legislation regarding securities, movable guarantees, simplified shares companies and insolvency (which prioritises reorganisation instead of liquidation) are likely to keep the country open to international investment.
Paraguay’s economy is on track to maintain a stable expansion rate accompanied by ongoing poverty reduction. Despite the progress made towards formalisation and economic diversification, growth remains vulnerable to volatility in neighbouring states and fluctuations in commodity prices, as 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, which was further heightened in February 2019 with the government’s placement of a $500m, 31-year Eurobond at 5.4 %.
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 close the transport infrastructure gap. In the corporate sphere, the market was kept busy with major mergers and acquisitions demanding clearance from the National Competition Commission (CONACOM); while arbitration continues to gain momentum in the dispute resolution sector.
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 process of institutionalisation), 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.