Paraguay’s Political Crisis: Former President’s Ouster and Bank Collapse

On November 7, 2026, just hours after his removal from office by Congress, Paraguay’s former President, Santiago Peña, was questioned at the attorney general’s office. This followed the collapse of a major bank that had left hundreds of thousands of citizens without access to their accounts.

The Central Bank of Paraguay is actively compensating those affected. So far, 1.2 million out of nearly 3 million Ueno Bank customers have received their insured deposits back, either fully or partially.

Peña’s arrival at the attorney general’s office was captured by Paraguayan media. He appeared in a black SUV, guarded by police, and was not handcuffed. His arrest, along with former Central Bank chief Carlos Carvallo, comes under allegations related to the banking crisis, including breach of trust.

The arrest was ordered after the Senate unanimously voted to remove him from office. This decision came three days after Ueno Bank was seized, setting off a political and financial upheaval.

Vice President Pedro Alliana has taken over, forming a new Cabinet. Meanwhile, lawmakers accused Peña of channeling public funds into Ueno while regulatory oversights occurred. Peña denies any wrongdoing.

On the streets, public protests have intensified following the impeachment verdict against Peña. Demonstrators demand accountability and access to their financial assets. Notably, Paraguay’s largest teachers’ union plans to commence a national strike, protesting the safeguarding of public pension funds.

Peña’s removal is significant due to his ties as an ally of former U.S. President Donald Trump. This marks the most severe political crisis in Paraguay in over ten years.

Despite submitting his resignation, Congress rejected it in favor of impeachment to deny him potential immunity. Opposition lawmaker Yolanda Paredes insisted on bringing Peña to trial, stating, “He must go, but not home. He must go to a maximum-security prison.”

Before his ouster, Peña issued a message hoping his departure would help stabilize the country. He noted, “My responsibility is to put the country above my personal fate.”

The financial and political disruptions continue, highlighting the fragility of Paraguay’s democracy. The demand for transparency and justice grows amidst public discontent.