Rank #90 · Americas
Paraguay spends approximately $390 million on defence — about 1% of GDP — maintaining a small force primarily oriented toward internal security, counter-narcotics operations, and protection of strategic infrastructure including the Itaipú hydroelectric dam, one of the world's largest power generators. The military's principal operational role is domestic: combating the Ejército del Pueblo Paraguayo (EPP) insurgency and narcotrafficking networks in the north of the country.
Paraguay's defence budget has grown modestly under the Colorado Party government, which has ruled the country for most of its post-1989 democratic history. The 2025 appropriation of approximately 2.8 trillion PYG ($390 million USD) represents about 1% of GDP — among the lowest ratios in South America. Personnel costs dominate at approximately 65% of the budget. Paraguay receives US counter-narcotics funding under SOUTHCOM programmes, supplementing the domestic appropriation. The Itaipú hydroelectric facility — co-owned with Brazil and providing 90% of Paraguay's electricity — is considered a critical national security asset, and the Armed Forces maintain dedicated protection responsibilities for the dam complex.
The Paraguayan Armed Forces field approximately 16,400 active personnel across the Army, Navy (including river forces), and Air Force. The Army is the dominant service, organized for territorial security and counter-insurgency. The Navy operates riverine patrol craft on the Paraguay and Paraná rivers — landlocked Paraguay's strategic waterways — as well as a small naval aviation element. The Air Force operates EMB-312 Tucano trainers, C-212 Aviocar transports, and UH-1 Huey helicopters. Paraguay maintains conscription with 12-month service. The large reserve figure (164,500) reflects the mobilization pool from historical conscript service; actual readiness is limited.
Paraguay has no domestic defence industry of significance. All major equipment is imported, typically second-hand, from the United States, Brazil, Argentina, and Israel. The Air Force's Tucano aircraft came from Brazil via government-to-government programmes. Small arms are a mix of US M16s and older platforms. US Section 1206 and counter-narcotics funding supports riverine patrol boat acquisitions and communications equipment. Paraguay lacks the population and economic base to sustain a domestic defence industrial programme. Infrastructure protection — particularly at Itaipú — has driven some investment in physical security systems from Israeli suppliers.
Paraguay faces no external military threats; it shares peaceful borders with Argentina, Bolivia, and Brazil. The primary security challenge is internal: the Ejército del Pueblo Paraguayo (EPP), a small Marxist insurgent group active in Concepción and Amambay departments since 2008, conducts kidnappings, killings of landowners and security forces, and cattle theft to fund operations. The EPP has links to narcotrafficking networks supplying Colombian cocaine transiting Paraguay. Brazilian organized crime groups (PCC, CV) operate across the border. The Tri-Border Area (Paraguay, Argentina, Brazil at Ciudad del Este) remains a concern for illicit finance and contraband flows. US SOUTHCOM engagement focuses heavily on these counter-narco challenges.
Paraguay's President Santiago Peña (took office August 2023) has maintained the Colorado Party's traditional security posture with modest defence increases. Joint military-police operations against EPP in Concepción department continued through 2024-25. Paraguay is one of the few remaining countries with formal diplomatic relations with Taiwan (Republic of China) rather than the People's Republic — a strategic relationship the government reinforced under Peña. Taiwan provides development aid; in exchange Paraguay has sustained recognition politically valuable to Taipei. The Air Force evaluated light attack aircraft including the Super Tucano and A-29 for a potential purchase in 2024; no contract was signed by end-2025.
Paraguay spent approximately $390 million on defence in 2025 — about 1% of GDP, one of the lowest ratios in South America. The budget is primarily personnel costs; equipment is mostly aging imported platforms.
The Ejército del Pueblo Paraguayo (EPP) is a small Marxist insurgent group active since 2008 in northern Paraguay's Concepción and Amambay departments. It conducts kidnappings for ransom, attacks on security forces, and is linked to narcotrafficking networks. It remains the Paraguayan military's primary operational challenge despite its limited size.
Itaipú hydroelectric dam is one of the world's largest power plants and provides approximately 90% of Paraguay's electricity. A successful attack or sabotage would cripple Paraguay's economy and power grid. The Paraguayan Armed Forces maintain dedicated security responsibilities for the facility.