The World Bank Scales Up Sustainable Agroforestry Financing in Paraguay

WASHINGTON, April 30, 2026 - The World Bank's Board of Executive Directors approved an innovative new project in Paraguay that will create jobs within sustainable agroforestry value chains in rural areas and expand access to long-term financing. The US$100 million "Scaling up Finance for Sustainable Agroforestry in Paraguay" project will be implemented by Agencia Financiera de Desarrollo (AFD), Paraguay's national development bank, and is structured around three core mechanisms:

• First, a line of credit will incentivize smallholder and medium-scale producers to invest in sustainable agroforestry activities, including commercial or mixed plantations, restoration of natural forests, silvopastoral systems, and value chain processing.
• Second, a Forestry Investment Fund will mobilize equity financing to larger-scale plantation projects and close financing gaps by attracting institutional and private investors.
• Finally, funding will also be allocated to strengthen AFD's Environmental and Social Management System and support project management and technical oversight, ensuring effective implementation and compliance with World Bank standards.

"This project represents a significant step forward in Paraguay's efforts to build a more sustainable and inclusive rural economy. By unlocking long-term financing for agroforestry, we are helping companies, rural cooperatives, smallholders, and developers work together towards managing natural resources sustainably and creating job opportunities," said Peter Siegenthaler, Division Director for the World Bank for Argentina, Paraguay, and Uruguay.

"AFD is proud to partner with the World Bank on this transformative initiative. Sustainable agroforestry is central to Paraguay's vision for rural development and climate resilience, and this financing will allow us to reach more producers with better conditions, scaling the sector toward more sophisticated and competitive markets." said Stella Guillén, President of the Agencia Financiera de Desarrollo (AFD).

The project's innovative design focuses on a sustainability-linked credit line that offers improved loan conditions to borrowers who meet specific environmental and social performance targets. Notably, Forest Stewardship Council (FSC) certification is a baseline requirement for financing, and developers who aggregate smallholders and conserve natural habitats beyond legal requirements will be eligible for further interest-rate reductions, directly linking the cost of financing to environmental and social development outcomes. The conversion of degraded pasturelands into diversified agroforestry systems that store more carbon, improve soil and water conditions, and reduce pressure on native forests will also be supported.

The World Bank Group remains committed to partnering with Paraguay to help the country achieve its development goals and ensure that the benefits of growth are felt across all segments of society, notably by creating job opportunities at scale.

The loan is a variable spread loan with a 17.5-year term, including a 3-year grace period.

Learn more about the work of the World Bank in Paraguay: https://www.bancomundial.org/es/country/paraguay

Learn more about the work of the World Bank in Latin America and the Caribbean: https://www.worldbank.org/lac

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