Political Turmoil in Paraguay as Financial Crisis Hits Ueno Bank Amidst Calls for President Peña’s Resignation

Original article: A meses de que Kast lo pusiera como ejemplo a seguir: Crisis financiera desata caos político en Paraguay

Paraguayan President Santiago Peña is on the brink of impeachment following a financial crisis that forced the government to intervene in the country’s largest bank, freezing the savings of millions of Paraguayans and even state funds.

The bank in question is Ueno Bank, which began operations in November 2023 and quickly became one of Paraguay’s leading financial institutions due to its aggressive digital strategy. By 2026, the bank had 2.9 million clients, nearly half the country’s population.

Ueno Bank not only manages the private savings of millions of Paraguayans but also handles 9% of the funds from the Social Security Institute, which oversees the pensions of 32,000 retirees in the country. Moreover, it administers part of the funds from the National Electricity Administration (ANDE) and the Binational Itaipu Dam, one of the largest energy producers globally.

The scandal erupted early Tuesday morning when the Central Bank of Paraguay announced the intervention of Ueno Bank after discovering that its solvency ratio had dropped below 50%, the minimum required by law.

«We have proceeded to close the institution; therefore, neither the app, nor the cards, nor any service from the bank is operational as of this date,» stated the Central Bank.

Concurrently, the Public Ministry ordered the arrest of eight top executives of Ueno Bank, including its main shareholder, Miguel Vázquez, who voluntarily surrendered to the authorities on Tuesday morning.

Meanwhile, the president of the Central Bank, Carlos Carvallo, resigned due to mounting scrutiny over his connections with Ueno Bank: Carvallo was the president of Ueno Financial -which later became Ueno Bank- from 2021 until September 2023, when he stepped down to become the head of the Central Bank.

Although Carvallo offered his resignation, he expressed that the financial crisis requires his continuing presence at the issuing body until the intervention process is complete.

Impeachment Proceedings Against Peña

As time passed, the financial chaos following Ueno Bank’s intervention morphed into a political crisis for Peña’s government: on Tuesday afternoon, thousands of people gathered outside the Paraguayan Congress in Asunción, demanding the president’s resignation.

It is noteworthy that Peña was a business partner of Ueno Holding until March 2025, when he sold his shares for over 6 billion guaraníes. In October this year, a report from ABC revealed that a company in which Peña was a shareholder until March had continued to earn millions of guaraníes from Ueno Bank for marketing services.

Despite opposition warnings about the risks of concentrating public funds in a single bank, Peña downplayed the situation and accused critics of a «petty and false media campaign» against him, asserting that he was protecting retirees’ savings.

Following the outbreak of the crisis, opposition senators announced plans to initiate impeachment proceedings to remove Peña and Vice President Pedro Alliana, as well as to pursue legal action against members of the Central Bank’s board.

The crisis escalated to the point that Peña had to cancel his participation in the XXX Ibero-American Summit, scheduled for Wednesday and Thursday in Madrid, to address «urgent state matters» directly.

Kast’s Example

In early July, President José Antonio Kast traveled to Paraguay to sign bilateral agreements with President Santiago Peña on tax matters and combating organized crime in the region. However, the visit is remembered for his controversial speech before the country’s Congress, where he cited the Paraguayan economic model as an example.

«Paraguay is an example for the entire region; it is a country that has managed to sort out its accounts, as we say, get the house in order. Maintain stability and astonishingly attract foreign investment,» Kast stated at the time.

«You have shown the world that, by lowering taxes, you have achieved growth and, most importantly, reduced poverty. If there is a country that has significantly decreased poverty levels, it is indeed you here in Paraguay, with an open economic model, lower tariff rates, and reduced tax amounts,» he added.