PARAGUAY POLITICAL AND ECONOMIC UPDATE JUNE 2-8,

UNCLAS ASUNCION 000481 SIPDIS SIPDIS STATE FOR WHA/BSC, INL/LP (JIM HIDES) EB/IFD/OIA STATE PASS TO USAID FOR LAC/AA STATE PASS TO USTR FOR LYANG NSC FOR SUE CRONIN TREASURY FOR OSIA MAUREEN WAFER TREASURY FOR OTA WARFIELD, VAN KOCH, MILLAR COMMERCE FOR ITA SARAH COOK SOUTHCOM FOR POLAD E.O. 12958: N/A TAGS: PGOV PHUM PREL PA SUBJECT: PARAGUAY POLITICAL AND ECONOMIC UPDATE JUNE 2-8, 2007 ¶1. SUMMARY -- Central Bank Regulates Street Money Changers -- Tax Collection Climbs -- USAID Launches Land Use Plan CENTRAL BANK REGULATES STREET MONEY CHANGERS ¶2. (U) The Central Bank granted permits to about 200 street money changers and is expected to grant 200 more permits by mid-June. The permits are based on a 2005 law regulating money exchange houses. The press estimates that there are as many as 3,000 informal money changers operating in Paraguay. They usually operate independently and offer small-scale, informal currency exchange on street corners. Central Bank regulations require that licensed operators work on their own account, use only cash, operate in public zones, and limit transactions to less than USD 10,000. The Central Bank commented that those money changers without permits are operating illegally. A representative of the money changers was quoted in the press saying that the unlicensed money changers will request a more flexible law and will continue working with or without permits. TAX COLLECTION CLIMBS ¶3. (U) The GOP continues to show significant advances in tax compliance and collection. In May, tax collections hit an all-time high and represented a 22 percent increase over last year,s total. The MCA Threshold program is assisting the Finance Ministry and the Tax service,s efforts in particular on business tax compliance. USAID LAUNCHES LAND USE PLAN ¶4. (U) The Environment Minister Carlos Antonio Lopez Dose, the Governors of Alto Paraguay (Erasmo Rodriguez Acosta) and Boqueron (David Sawatzky Funk),civil society leaders and other public officials participated in the launch of a new USAID-supported land use plan for the Alto Paraguay Department June 5. Alto Paraguay is the largest of the 17 departments in Paraguay, sparsely populated, but home for much of the country,s biodiversity and its protected areas. The land use plan was developed to serve as a tool for both public and private entities to encourage growth and use of natural resource in a sustainable manner. USAID support is also coordinated with the European Union and Germany technical assistance (GTZ) and provided through a local NGO Fundacion DesdelChaco, a key partner in our efforts to protect Paraguay,s biodiversity. FITZPATRICK