Paraguay Leader Steps Down Amid Financial Institution Collapse and Impeachment Proceedings

Paraguayan President Santiago Peña announced his resignation following a severe political crisis sparked by the insolvency of digital lender Ueno Bank. In a recorded video message shared on social media, Peña stated that he stepped down to preserve national stability, social peace, and democratic institutions, while offering an apology to the public if he failed them at any point.

The institutional turmoil intensified after Ueno Bank entered an insolvency process that froze all operations, cutting off access for roughly three million customers, which accounts for about 60 percent of the nation's adult population. The digital lender held pensions and other public funds, administering close to $850 million in public resources. Following the collapse, the central bank seized the institution, and citizens staged street demonstrations demanding the president's departure.

Lawmakers accused Peña of conflicts of interest, misuse of pension funds, negligence, institutional cover-ups, and misconduct linked to the bank. Al Jazeera’s Latin America editor Lucia Newman reported that legislators accused him of complicity in concealing the bank's insolvency. Peña, who was a shareholder in the company owning the bank until last year, consistently rejected suggestions of impropriety. The lower house of congress subsequently voted to pursue an impeachment trial after Peña lost backing from members of his own conservative Colorado Party.

The crisis prompted swift administrative actions, including the appointment of a new president of the Central Bank of Paraguay and congressional approval for a process to repay affected depositors. Vice President Pedro Alliana is scheduled to take office as Peña's replacement. Meanwhile, demonstrators gathered outside congress urging lawmakers to reject the resignation to ensure the president faces a formal trial and impeachment proceedings.

Ueno Bank has made no public statement regarding the situation. Peña, who won election in 2023 representing the ruling conservative Colorado Party, emphasized in his final address that his greatest wish remains the guaranteed return of funds, the fulfillment of the deposit guarantee fund's purpose, and the protection of public resources belonging to all citizens.