State and financial crisis in Paraguay: arrest warrant for deposed president

dpa | The turbulent financial and state crisis in Paraguay, South America, has continued to worsen. Parliament replaced the country's president in the evening. The Senate voted unanimously to impeach former head of state Santiago Peña after the Chamber of Deputies did the same, as seen on Paraguayan television. A short time later, the Attorney General's Office issued an arrest warrant against Peña. He is accused of involvement in the current banking scandal.

The new head of state is the previous Vice President Pedro Alliana, who was sworn into office shortly after Peña's removal from Congress. He will initially control the fortunes of Paraguay, which is currently being shaken by a financial and state crisis, until August 2028.

Almost simultaneously with Alliana's swearing in, the judiciary took action against Peña. According to the public prosecutor's order, he must remain under house arrest until he is brought before the economic crime and anti-corruption department. According to local media, this should happen on Saturday.

The online portal “abc” broadcast footage showing police forces in front of Peña’s house. An arrest warrant was also issued against central bank chief Carlos Carvallo.

Senators agreed during the impeachment session that Peña was guilty of dereliction of duty in office. He did not appear at the hearing in the Senate and was represented by his lawyers.

He had previously asked in vain for the appointment to be postponed for 72 hours. Peña's lawyers argued that the impeachment process was ineffective because Peña had previously resigned.

Peña had tried to forestall the impeachment process. However, the Senate and the Chamber of Deputies did not accept his request. If Congress had followed Peña's request, he, as a former president, would have become a senator for life - which would have meant parliamentary immunity.

Paraguay is currently being rocked by a financial crisis with political consequences. Millions of people fear for their savings since Ueno Bank, which was at the center of a scandal, became effectively insolvent. The central bank initiated resolution proceedings against the financial institution after its equity ratio fell below half of the required minimum value. As a result, customers were temporarily no longer able to access their accounts. The digital bank had grown into one of the largest banks in Paraguay in recent years.

Peña maintained business relationships with “Grupo Vázquez,” to which Ueno Bank belonged, until March 2025. The politician had always rejected allegations of possible conflicts of interest. The Attorney General's Office opened several investigations against Peña on Thursday. This involves the supervision of the bank, its processing and the provision of public funds for the financial institution.

The public prosecutor's office confirmed arrests of bank executives. Central bank chief Carlos Carvallo had to resign from his post after he was also accused of a conflict of interest due to his previous work at Ueno Bank.

Interior Minister Enrique Riera, head of cabinet Javier Giménez and Roberto Moreno, the presidential legal advisor, also announced their resignations.

The 52-year-old Alliana is considered economically liberal and conservative. Like Peña, the merchant belongs to the traditional Colorado party, which led the country for decades.