Why is Paraguay facing a banking and political crisis?
Lawmakers in Paraguay have resumed impeachment proceedings against President Santiago Pena, a day after he resigned amid links to the country’s worst financial crisis in decades.
The Senate convened a rare session on Friday to consider Pena’s political future, opting to move forward with efforts to remove the conservative economist from office.
Politicians formally filed impeachment charges against the president on Thursday, despite his resignation. Pena, who was elected in 2023, has requested a 72-hour extension to prepare his defence before the Senate.
The proceedings follow a vote in Paraguay’s lower house of Congress, where lawmakers overwhelmingly approved impeachment charges against Pena in a 78-0 vote.
The political turmoil surrounding the country’s president follows Paraguay’s central bank’s intervention earlier this week at Ueno Bank, one of the country’s fastest-growing digital lenders, citing breaches of minimum solvency requirements.
Pena previously held a stake in Ueno’s parent company, Grupo Vazquez, until last year, when he claims he sold his shares. Paraguayan lawmakers have accused the president of a conflict of interest and questioned whether authorities failed to act on warnings about the lender’s financial position.
The collapse of Ueno, which held $850m in public funds, has left more than half of Paraguay’s population without access to their accounts, drawing intense scrutiny over the government’s relationship with the bank and financial regulators’ effectiveness.
“My greatest wish is that the return of those funds be guaranteed, that the deposit guarantee fund fulfil its purpose, and that public funds — as well as the resources that belong to all Paraguayans — be protected,” Pena said in a Thursday video address where he apologised for failing to prevent the crisis.
The crisis has also prompted the resignation of Paraguay’s central bank chief, Carlos Carvallo, and arrest warrants for eight Ueno executives, who later turned themselves in.
Paraguay’s attorney general has ordered three criminal investigations into the bank’s collapse, including its regulatory oversight and the placement of public funds in the institution.
If Pena is convicted in an impeachment trial, he would lose the lifetime Senate seat and associated legal protections ordinarily granted to former Paraguayan presidents.
