A banking crisis topples Paraguayan President Santiago Peña amid widespread protests
Asunción – professional journalistic style
An unprecedented banking crisis shook the political and economic scene in Paraguay, resulting in President Santiago Peña announcing his resignation from office, in the wake of the collapse of Ueno Bank, one of the largest digital banks in the country. These developments came amid massive popular protests and political accusations of a conflict of interest and misuse of public funds, in a case that toppled a president who is considered one of the most prominent allies of the US administration led by Donald Trump and supporters of Israel in Latin America.
According to a press report published by the Israeli “Channel 12” website by journalist Assaf Rosenzweig, the resignation of Peña (47 years old), an economist who previously worked at the International Monetary Fund, came after the worsening financial crisis following the Central Bank’s control of the digital bank, as a result of supervisory reports that proved its lack of commitment to capital requirements and financial stability. This intervention led to the disruption of banking services, the mobile phone application, credit lines, and the closure of branches, depriving about 3 million customers – nearly half of the country’s population – from accessing their accounts and savings, including retirees and large segments of the citizenry.
The Associated Press indicated that the bank was managing public funds worth between $800 and $850 million, including government pension and health fund funds, which sparked widespread panic in the financial system that prompted customers to flock to other banks, putting pressure on the banking infrastructure.
In the face of the repercussions of the crisis, the capital, Asuncion, witnessed hundreds of protesters, including students, employees, retirees, and bank customers, taking to the streets, demanding the return of their money, holding officials accountable, and the dismissal of the president, as the police used tear gas to disperse the demonstrators. Employees of the bank and companies affiliated with the Vasquez Group, which owns the institution, also joined the protests to demand the payment of their pending salaries.
Politically, the crisis turned into a direct threat to the president’s survival in power after the conservative Colorado Party withdrew its support for him. This coincided with the opposition movement in Parliament, where 35 deputies submitted an official request to begin impeachment proceedings against the president, accusing him of a conflict of interest and illegal use of retirement funds, highlighting his ownership of shares in the “Vasquez” group until March 2025, in addition to criticism of his appointment of Carlos Carvajo as governor of the Central Bank in 2023.
On the other hand, the Public Prosecution brought charges against 27 managers and businessmen on suspicion of committing violations, including breach of trust and attempted fraud. Investigations resulted in the arrest of 8 of the bank’s most prominent officials and its founder, amid Associated Press investigations revealing suspicions of granting high-risk loans to entities linked to the owners and a lack of documents.
In a recorded speech in which he announced his decision, Peña said: “I am taking this step out of consideration for the stability of our country, social peace, and the necessity of preserving our democratic institutions,” offering his apologies to citizens for the possible disappointment, and emphasizing that his primary goal remains ensuring that customers get their money back, without bearing direct responsibility for the crisis.
These developments have regional and international dimensions given Peña’s political status. It is a close ally of Washington, and is known for its positions in support of Israel, which were practically embodied in December 2024 by moving the Paraguayan embassy to Jerusalem.
Vice President Pedro Aleana is expected to take over the reins of power to succeed Peña, facing a heavy legacy that includes addressing the banking crisis, calming popular anger, and restoring confidence in state institutions and the deteriorating financial system.
