Paraguay's lower house voted 78-0 to impeach President Santiago Peña on Thursday. The move followed Peña's resignation after the collapse of Ueno Bank, which froze the savings of millions of citizens.
The 78-0 Repudiation of Santiago Peña
The unanimous vote in Paraguay's lower house represents a total collapse of support for President Santiago Peña, including from his own Colorado Party. This political abandonment occurred just minutes after Peña announced his resignation via a video on X,citing the need to preserve democratic institutions and social peace. The impeachment process now moves to the Senate, where a two-thirds majority is required for a formal conviction.
Vice President Pedro Alliana is expected to be sworn in as the new president to serve out the term ending in August 2028... This rapid transfer of power follows three days of intense demonstrations in the capital city of Asunción, where citizens demanded the return of their frozen assets.
Ueno Bank’s $800 Million Collapse and the 60% Reach
Ueno Bank grew from an obscure finance firm into a dominant market force in under five years, eventually claiming more than 60 per cent of Paraguay's adult population as customers. According to the report,the bank held approximately US$800 million in public deposits by last month, including critical funds from the state health fund and the state pension fund.
The fallout of the bank's seizure has left 7,000 employees facing unpaid wages and millions of depositors unable to access their accounts. The collapse was so systemic that when depositors attempted to move their money to other institutions on Wednesday, the resulting surge crashed several other banks' mobile applications, sparking widespread public panic across Paraguay.
The $39 Million Single-Day Transfer to Insiders
The catalyst for the collapse was a pattern of illegal insider lending. As reported, central bank inspectors discovered in June that Ueno Bank had extended large sums to companies tied to its owners without sufficient collateral. In one particularly egregious instance in September 2025, nearly $39 million was transferred to three such companies in a single day.
These accounting irregularities eventually decimated the bank's capital cushion . Once regulators corrected the books to remove expenses that had been wrongly counted as assets, Ueno Bank's capital fell to less than half of the legal minimum, forcing the central bank to seize the lender on Tuesday.
Seventy Years of Colorado Party Dominance and the Asunción Protests
The Ueno Bank crisis has reignited long-standing grievances regarding the Colorado Party's 70-year grip on Paraguayan power. Protesters in Asunción, including retirees and university students, have characterized the banking failure as part of a broader history of plunder by the ruling elite. The situation was further exacerbated when former president Horacio Cartes, a powerful leader within the Colorado Party, withdrew his support for Santiago Peña.
This political volatility contrasts sharply with Paraguay's recent reputation as a stable destination for international investors. The crisis suggests that the country's economic growth may have been masking deep-seated weaknesses in regulatory oversight and a dangerous proximity between the business elite and government regulators.
The Conflict Between Carlos Carvallo’s Role and Central Bank Oversight
A central point of contention remains the appointment of Carlos Carvallo to lead the central bank. Carvallo previously served as the president of Financiera Ueno, the predecessor to Ueno Bank, creating a glaring conflict of interest as he was tasked with supervising the very entity he once led. While Carvallo resigned at the request of Santiago Peña, the timeline of his tenure raises critical questions.
It remains unclear why the Paraguayan government ignored repeated warnings about Ueno Bank's dubious lending practices until the institution became too large to fail. The report notes that President Santiago Peña repeatedly dismissed these warnings as a "smear campaign," leaving a gap in the record regarding who specifically authorized the bank's rapid expansion despite the red flags raised by inspectors.
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