Paraguay Crisis: Pedro Alliana Sworn In as President After Santiago Peña’s Impeachment

Pedro Alliana was sworn in as Paraguay’s new president on Friday, shortly after authorities placed his predecessor, Santiago Peña, under house arrest amid a political and financial crisis linked to the collapse of digital bank ueno.

Prosecutors outside Peña’s residence in Asunción said they were still determining possible charges, which could include influence peddling. They ordered the former president to appear at the prosecutor’s office on Saturday morning.

The Senate unanimously impeached Peña about an hour before Alliana’s swearing-in. Lawmakers cited concerns about Peña’s past links to ueno, which had provided banking accounts to nearly half of Paraguay’s population.

Peña offered to resign on Thursday. However, senators chose to complete the impeachment process instead of accepting his resignation. They then moved to install Alliana, who had served as vice-president.

Dozens of protesters gathered outside Peña’s home following his removal. Police established a security cordon around the property.

The crisis began earlier this week when Paraguay’s central bank intervened in ueno. The digital lender had expanded rapidly since its launch in 2021, attracting customers who previously had limited access to banking services.

However, questions emerged over its lending practices and connections to Paraguay’s political and financial elite. Peña held shares in ueno’s holding company until last year. Central bank chief Carlos Carvallo had also led the company until 2023.

Prosecutors issued an arrest warrant for Carvallo on Friday. He resigned earlier this week as authorities began emergency proceedings to prevent the lender from dissolving. Eight former ueno executives have already been detained.

Several members of Peña’s inner circle also resigned, including his interior minister, chief of staff and two advisers.

The impeachment charges accused Peña of conflicts of interest, interference in regulatory oversight, diversion of pension funds and involvement in an institutional cover-up linked to the central bank.

Peña denied wrongdoing and described the matter as a regulatory issue. The central bank also rejected allegations of a conflict of interest, saying Carvallo had recused himself from all decisions involving ueno.

The crisis has triggered protests in central Asunción, where demonstrators are demanding accountability and faster compensation for customers whose savings remain inaccessible.

Small groups gathered outside the central bank’s headquarters on Friday, chanting, “We want our money.”

Some affected customers include pensioners who receive state benefits through ueno. Earlier this week, Peña approved legislation intended to speed up payments to depositors. Some account holders began recovering their money on Thursday.

The political uncertainty has also drawn attention from investors, particularly in neighbouring Brazil, Paraguay’s largest economic partner.

Regulators have sought to reassure financial markets by guaranteeing most deposits and containing the risk of wider instability in the banking system.

A Brazilian government source told Reuters that Brazil’s immediate priority was preventing social unrest in Paraguay and ensuring the banking crisis did not spread.

Mariano Machado, Americas principal analyst at Verisk Maplecroft, warned that protests could intensify if Peña’s removal appeared to shield him from accountability or if payments to depositors and pensioners stalled.