Paraguay: Santiago Peña announces resignation amid banking crisis

“I have made the decision to submit my resignation from the presidency of the Republic,” Mr. Peña said in a video broadcast on the social media network X. He justified his choice by the need to preserve the stability of the country, social peace, and democratic institutions.

The crisis erupted less than 48 hours ago with the placement of the Ueno bank under guardianship by the Central Bank of Paraguay (BCP). This financial institution claimed 2.94 million clients, whose deposits have been temporarily frozen. Mr. Peña, until last year, held shares in a company holding this bank, which has experienced rapid growth in recent years.

At the time of his announcement, the deputies, meeting in an extraordinary session, were voting on a motion of impeachment, with near unanimous support, including within the Colorado Party, the president’s majority party.

The motion of impeachment, filed by the opposition on Wednesday, accused Mr. Peña of “improper exercise of his duties” and “conflict of interest.” Deputy Alejandro Aguilar, a member of the Colorado Party, justified his support for the procedure, noting that a program to reimburse defrauded savers could “erase the harm caused to the Paraguayan people and the financial system.”

“I know that he has lost the legitimacy to govern. I know that the president will no longer be able to build consensus to continue his government. And yes, I know that he is politically responsible for what has happened,” Aguilar said.

The opposition denounced a “scam in the history of Paraguay,” insisting on the need for Mr. Peña’s immediate resignation.

Following the placement of Ueno under guardianship, Carlos Carvallo, the president of the BCP, had already announced his resignation, a request made by President Peña. Eight Ueno executives are currently in provisional detention, and approximately twenty other individuals are subject to legal proceedings.

The Parliament adopted a special law on Wednesday, providing for initial payments to defrauded savers, potentially reaching the equivalent of 40 monthly salaries, or 121 million guaranis (approximately $20,000 US dollars).

Despite assurances from the BCP regarding the solidity of the national financial system, demonstrations erupted in Asuncion, first in front of Ueno branches, then near the Parliament. The demonstrators, many of whom were savers, chanted slogans such as “Santi out!” and “Santi is scared!” Clashes occurred between the demonstrators and the police, who used water cannons and tear gas.

“Today, I have only one priority: the tranquility of Paraguayans who have entrusted their savings to our financial system,” Mr. Peña affirmed in his resignation message. He also expressed his regrets and assured that he had never intended to betray the trust of the people.

Santiago Peña, comfortably elected in 2023, was an economist who had previously held positions at the BCP and the International Monetary Fund. He represented a new generation within the Colorado Party, which has dominated Paraguayan politics for decades.