Paraguayan president resigns amid Ueno bank crisis and impeachment proceedings

Paraguayan President Santiago Peña resigned from office on Thursday to avoid an impeachment process initiated by the country's parliament. The resignation follows the collapse of Ueno, a major digital bank that managed significant state funds, including pension and health system money. This crisis has escalated from a financial scandal into a national political crisis.

The collapse of Ueno Bank

The crisis intensified on Tuesday when the central bank determined that Ueno's solvency ratio had fallen below the required 50 per cent minimum. Following this finding, the central bank president, Carlos Carvallo, resigned, and the new central bank president ordered the intervention and dissolution of Ueno.

Ueno Bank held a significant position in the Paraguayan economy, serving approximately 2.9 to 3 million customers in a country of 6.1 million people. The bank managed up to 850 million US dollars in state funds, including money from the Instituto de Previsión Social. According to reports from taz, the bank had been under scrutiny since June, when central bank investigators found evidence of risky credit transactions involving insiders.

Political links and conflicts of interest

The bank's downfall has exposed deep connections between President Peña and the financial institution. After taking office in August 2023, Peña appointed Carlos Carvallo—the former head of Ueno—as the president of the central bank. Furthermore, sociologist Luis Ortiz told Tagesschau that Peña was a shareholder in the corporate group owning the bank until last year.

In our assessment, the crisis highlights how private financial interests can become inextricably linked to state institutions. While Peña repeatedly dismissed allegations of conflicts of interest, local media and observers have pointed to irregularities in credit lending.

Impeachment and public unrest

Peña's resignation was triggered by a shift in support within his own party, the Colorado Party. Horacio Cartes, the former president and current chairman of the party, announced on Thursday that he would support the impeachment proceedings. Although Peña submitted his resignation to preserve "social peace" and "democratic institutions," the Paraguayan parliament voted unanimously to proceed with the impeachment process minutes after his announcement.

The political turmoil has sparked significant public anger. According to Tagesschau, citizens gathered to protest in front of the Congress, many of whom had been unable to access their savings since Tuesday. Protesters have called for the imprisonment of both the president and central bank officials, accusing them of allowing the crisis to occur.

This piece was generated automatically by an AI model from the sources listed below. It has not been reviewed by a human editor.

Sources

• Staatskrise in Paraguay: Wenn der politische Ziehvater sich gegen den Präsidenten stellt — taz
• Paraguay: Die Bankenkrise wird zur Staatskrise — Tagesschau