After a major banking crisis, Paraguay dismissed its president to reappoint another

Paraguay inaugurated a new president, Pedro Alliana, on Friday, November 6, while his predecessor Santiago Peña was dismissed the same day for his responsibility in a major banking crisis. Pedro Alliana, 52, affirmed in his first brief speech before the Senate that "compatriots who are going through a very difficult situation because of the financial chaos will be fully compensated. We will not leave them alone."

President of Paraguay since 2023, close ally of Washington, Santiago Peña, 47, whose mandate in principle ended in 2028, was dismissed after the Senate unanimously recognized him guilty of "poor exercise of his functions", in connection with the Ueno bank debacle. The banking crisis, which quickly turned into a deep political crisis, broke out on Tuesday with the Central Bank (BCP) placing an online bank that has flourished in recent years, Ueno Bank, under supervision for insolvency.

Breach of trust and influence peddling

The BCP's intervention froze the deposits of nearly three million people, the number of customers Ueno claimed was almost half the country's population. Companies, institutions and pension funds have also been affected. Pedro Alliana, from the same conservative party as Santiago Peña, was also implicated in the banking crisis. But in his case, Parliament voted against an impeachment trial.

Barely an hour after his dismissal, the ex-president was placed under house arrest. He “will remain as a detainee at his home” during the night from Friday to Saturday, prosecutor Silvia Margarita González Vester told journalists. She added that Santiago Peña would be heard on Saturday, for the alleged offenses of breach of trust, influence peddling and management for personal gain.

During the impeachment trial, senators accused the ex-president of having "permitted, tolerated and failed to correct a diversion of pension funds to a bank linked to the presidential circle". In other words, "having subordinated the public interest to private interests", launched Senator Adrián Vaesken. Santiago Peña was also, even before his presidency and until 2025, a shareholder in the financial holding company that owns Ueno bank, senators recalled.