The Paraguay River has reached its lowest level in half a century after months of extreme drought in the region, exposing the vulnerability of landlocked Paraguay’s economy.
Some 85 percent of Paraguay’s foreign trade is conducted via the river, which has been depleted because of a lack of rainfall in the Pantanal area of Mato Grosso state in Brazil. The river flows from that area and also runs through Bolivia and Argentina.
The fall in the water level has slowed down cargo vessel traffic on the Paraguay River, causing significant cost overruns for the transport of fuel, fertiliser, food and other imported goods. The crisis has also exposed the precariousness of Paraguay’s access to drinking water.
“We have never had a situation as serious as the one we are experiencing now. We are approaching the end of the year, a time when more products must enter,” said Nery Gimenez, president of the Paraguayan Importers Center.
The government had announced the lifting of the strictest parts of its coronavirus pandemic-related lockdown, but hopes of a resurgence of economic activity have been undermined by the river problem, Gimenez said.
Esteban dos Santos, president of the Paraguayan Shipowners’ Center, said losses in Paraguay’s river transport sector have already reached $250m.
“What worries us the most is that the river is going down at a rate of three or four centimetres [1.2 to 1.6 inches] per day. The navigation situation is critical. In a week, no boat will be able to reach Asuncion,” dos Santos said.
Paraguay could face bigger price increases and shortages of fuel and other supplies if the situation continues to deteriorate. Wildfires have also broken out in parts of the country because of the dry conditions.
The falling levels of the Paraguay River have yielded one surprise: a rocky islet in Asuncion that geologists say is part of an extinct volcano dating back more than 40 million years.