Paraguay's President Peña announces resignation amid banking scandal as impeachment also proceeds

Anger and protests have spread across Paraguay after nearly half the country's people were left unable to withdraw their savings in the fallout of a banking scandal. Amid the situation, President Santiago Peña announced his resignation on Thursday.

However, with an impeachment process against him under way, Congress has for now suspended accepting the resignation. As a result, Peña will have to continue serving as president in the interim.

The crisis began two days earlier, when the country's central bank took state control of Ueno Bank, which has links to President Peña. The move froze the bank deposits of about three million people, including pensioners, and protests began across the country.

On Thursday, thousands of people gathered in front of the Congress building in the capital Asunción demanding the president's resignation. They were heard chanting 'give our money back'.

Earlier, protesters clashed with police in various places. Police used tear gas and water cannon to bring the situation under control.

Andrés Maldonado, a 21-year-old student and protester, told AFP: 'My family's money is finished. We have no cash in hand. Santiago Peña is a criminal. He must go to prison.'

On Thursday, lawmakers voted unanimously to begin impeachment proceedings against Peña on charges of failing to handle the banking crisis, misconduct and a conflict of interest with the bank involved. The right-wing president said he would attend the impeachment trial due to begin on Friday. Before that, he also apologised to the people of Paraguay.

Announcing his resignation in a video message posted on social media platform X, Peña said: 'It was never my intention to betray the trust you placed in me.' He added: 'What matters most to me is removing the worry and uncertainty of the Paraguayan people who deposited their savings trusting our financial system.'

Meanwhile, Interior Minister Enrique Riera also resigned on Thursday, according to a government order published in local media. Carlos Benítez has taken interim charge in his place.

Paraguay's central bank said it had taken control of Ueno Bank because of a serious capital shortage, and that the decision was taken to protect depositors' interests and maintain the stability of the financial system.

Nadia González, a 26-year-old mother of three, told AFP: 'Ueno Bank approved a loan for us to buy our first home. But that money was never released. Now we have nowhere to shelter.' On Tuesday and Wednesday, long queues of customers trying to withdraw money were seen in front of Ueno Bank branches in Asunción.

President Peña held shares in a company that controls the bank, though he sold those shares last year. To calm the situation, he asked central bank governor Carlos Carvallo to resign, and Carvallo agreed. A five-day deadline was also set for returning the money frozen in the bank. But these steps did not improve the situation.

A special session of both chambers of Congress was called on Thursday to decide whether to accept Peña's resignation or reject it and proceed with impeachment. But the session failed to reach quorum for lack of the required number of members, so no vote could be held. A later special session decided that Peña's impeachment trial would begin on Friday morning.

If Peña's resignation takes effect, Vice President Pedro Alliana is expected to take over as president of the South American country.