It is the first budget drawn up by the administration that took office following the sudden impeachment of former President Fernando Lugo in June, and Economy Minister Manuel Ferreira said attracting investment was the policy focus.

Paraguay's small, agriculture-based economy is expected to contract 1.5 percent this year due to a sharp drought that battered the crucial soy crop and an outbreak of foot-and-mouth disease that hit the beef industry.

Ferreira said next year's budget plan envisioned robust 8.5 percent economic growth. It pegs inflation at 5 percent with an estimated budget deficit of 2.1 percent of gross domestic product.

"The objective of this budget is to have a big impact at the base of the economic pyramid, to increase consumer activity and boost the saving capacity of everyone, including low-income families," he said.

Paraguay, one of South America's poorest countries, plans to sell about $500 million worth of bonds abroad in February, Ferreira said earlier this month.

Paraguay last issued debt in 2000, for the amount of $400 million. The deal was agreed to ahead of time with two banks in Taiwan, with which Paraguay has diplomatic relations.