Buenos Aires, Argentina – Paraguay’s Congress removed President Santiago Peña from office on Friday amid a mounting financial and political crisis triggered by the collapse of ueno bank, the country’s largest digital lender.
Lawmakers rejected his decision to resign yesterday – which would give him a lifetime parliamentary seat and therefore immunity from prosecution – and instead pressed ahead with impeachment proceedings.
Members of Congress accused Peña of conflicts of interest and financial misconduct, pouring funds into ueno while prohibiting proper oversight of the bank, which led to Paraguay’s worst financial crisis since 1995.
On Friday, the Senate unanimously found him guilty of “poor performance of his duties,” after Peña skipped the session and sent his lawyers instead. As the vote took place, the Public Prosecutor’s Office filed criminal charges against the president over his alleged links to embezzlement at the digital bank.
The collapse of ueno bank
On November 3, Paraguay’s Central Bank began winding down ueno after its solvency ratio fell below 50% of the legal minimum, leaving more than 2.9 million customers – nearly half of the country’s 6.4 million people – without access to their deposits. State institutions, cooperatives and pension funds also held money in the bank.
Ueno’s collapse triggered mass street protests, with angry customers demanding access to their savings, while the country’s largest teachers’ union announced an indefinite strike.
In an interview with Latin America Reports, Alfredo Boccia, a political analyst and historian at the National University of Asunción, said Peña’s position had become untenable because of “the enormous indignation and anger that led people to take to the streets.”
According to Boccia, ueno went from “a small finance company to one of the most important banks in the country” in two years, which he attributes to “the favors it received from Peña’s government, which changed some laws, relaxed regulations, ignored warnings and allowed financially very strange mergers.”
Peña held shares in Ueno Holding – a company controlled by the Vázquez Group, which also owns ueno bank – until March 2025, nearly two years into his presidency. He declared a 1.58% stake in August 2023, shortly after he was sworn in, but said the holding never owned shares in the bank.
His links to the financial entity were part of the impeachment charges filed by 35 lawmakers from the lower house, who accused him of a conflict of interest and questioned his appointment of Carlos Carvallo, a former head of Financiera Ueno, as Central Bank president. They also accused him of allowing hundreds of billions of Guaraníes from the Social Security Institute to be concentrated in ueno, above legal limits.
The Colorado Party turns on Peña
On Thursday, the decisive blow against Peña’s political career came from his own Colorado Party. Former President Horacio Cartes, who had backed Peña’s presidential candidacy in the past, announced it would support impeachment proposed by the opposition, weeks after Peña and Vice President Pedro Alliana had broken with him.
“It is something new,” Boccia said, when asked whether the crisis resembled the fall of Raúl Cubas in 1999 or Fernando Lugo’s impeachment in 2012. “The president was left without any kind of support, not even within his own party.”
Peña eventually announced his resignation, which would have secured him lifetime immunity from prosecution as a former president, but the Chamber of Deputies denied it and approved the charges by 78 votes to zero, a vote that eventually led to his removal by the Senate.
With Peña removed from office, Vice President Pedro Alliana, who escaped impeachment after lawmakers rejected the charges against him by 48 votes to 30, is set to complete the term through August 2028, which, Boccia noted, would bar him from running for president and leave the party without a visible candidate.
The crisis that crossed borders
The crisis has also crossed borders. In Buenos Aires, around 900 workers at Kaitel, the Argentine branch of the technology company that developed ueno’s systems, were suspended without pay.
“What has collapsed is the model of ‘Giant Paraguay’”, said Boccia, referring to the slogan of an official communications campaign promoted by Peña’s government to portray a growing country, built on financial stability. In that sense, the analyst concluded that the crisis will have “severe consequences”, especially in the country’s credibility. “What collapsed was precisely what they were most proud of, which was financial stability.”
