Paraguay's President Peña Impeached and Removed as Bank Collapse Sparks Nationwide Crisis

Paraguay's President Santiago Peña has finally lost power over a banking scandal. On Friday he was impeached and removed from the presidency. At the centre of the political storm is the collapse of a major bank with close ties to his administration.

The crisis began with Ueno Bank. Paraguay's central bank took the bank under state control because of a serious capital shortfall. The bank then went under, and severe financial uncertainty spread across the country.

The hardest blow has fallen on ordinary depositors. Around three million people cannot withdraw the money they deposited; pensioners are among those affected. Millions of people have effectively lost access to their own savings.

News of the bank's collapse triggered protests in the capital Asunción and elsewhere in the country. Thousands gathered in front of the Congress building demanding the president's resignation, chanting 'give our money back'. Clashes broke out between protesters and police in several places; police used tear gas and water cannon to control the situation.

Andrés Maldonado, a 21-year-old student and protester, told AFP: 'My family's money is gone. There is no cash in hand. Santiago Peña is a criminal. He must go to prison.' Nadia González, a 26-year-old mother of three, said Ueno Bank had approved a loan for their first home but the money was never released; now they have nowhere to live.

To defuse the situation, Peña himself announced his resignation on Thursday. In a video message posted on the social platform X, he apologised to the people of Paraguay, saying: 'It was never my intention to betray the trust you placed in me.' But because impeachment proceedings were already under way against him, Congress put acceptance of the resignation on hold.

On Thursday, lawmakers voted unanimously to open impeachment proceedings against Peña on charges of failing to handle the banking crisis, misconduct and a conflict of interest with the bank concerned. The impeachment trial was set to begin on Friday morning; that trial made his removal final on Friday.

President Peña had held shares in a company that controlled the bank, although 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 trapped in the bank; none of it, however, contained public anger.

Amid the crisis, Interior Minister Enrique Riera resigned on Thursday; Carlos Benítez has taken interim charge in his place. The central bank has said Ueno Bank was taken into control to protect depositors' interests and preserve the stability of the financial system.

With Peña removed, Vice President Pedro Alliana is in line to take over the presidency under the rules. But the biggest question facing the new leadership remains the same — when will the deposits of some three million trapped customers finally be back in their hands.