Pedro Alliana has been sworn in as the new president of Paraguay after Congress impeached and removed Santiago Peña from office over a banking scandal.
Minutes after the Senate stripped Peña of his presidential immunity and voted to convict him in absentia, the Paraguayan Public Prosecutor's Office issued an order for the former leader's arrest on charges of breach of trust.
Alliana, who served as vice president until the transfer of power took place before the National Congress in Asunción, will now complete the remainder of the current constitutional mandate, which is scheduled to run until August 2028.
Arrest warrant for Santiago Peña
The rapid political shift followed a legislative impeachment trial that found Peña guilty of misconduct connected to his ties with Ueno bank, a private financial institution that received millions in state institutional funds throughout his presidency.
According to the prosecution, the arrest warrant was authorized on grounds of breach of trust immediately after the upper legislative house voted for Peña's dismissal, leaving him without the legal protections usually afforded to a sitting head of state.
Under the constitutional framework of Paraguay, the National Congress holds the authority to remove high officials through an impeachment process known as a political trial. The Chamber of Deputies acts as the prosecutor by formulating charges, while the Senate acts as the judging tribunal. A conviction immediately strips the executive of constitutional immunity, permitting ordinary judicial authorities to pursue criminal investigations and issue detention orders without delay.
In the Paraguayan legal system, breach of trust is a criminal offense defined in the national penal code that addresses actions by public officials or corporate administrators who inflict financial damage on assets entrusted to their care. The charge frequently forms the basis for judicial proceedings involving the mismanagement of state resources, public procurement irregularities, or unlawful financial dealings between state bodies and private commercial entities.
The collapse of Ueno bank
The political crisis that ended Peña's presidency erupted following the sudden collapse of Ueno bank, which maintained accounts for 2.94 million customers across the South American nation. Most of the account holders were ordinary citizens, alongside major institutional depositors.
Deposits and institutional assets held at the private lender have remained frozen since Tuesday, when the Central Bank of Paraguay ordered a formal regulatory intervention into the institution. Among the affected organizations is the Social Insurance Institute, the state agency responsible for the nation's pension system, which held substantial public pension reserves in the commercial bank.
The Central Bank of Paraguay operates as the autonomous monetary authority and banking regulator for the nation. Under domestic banking laws, the regulatory body holds the statutory power to step into troubled private commercial banks, take administrative control, halt transactions, and conduct comprehensive financial audits when an institution faces liquidity crises or governance failures, preventing runs that could threaten the wider financial system.
The Social Insurance Institute, commonly referred to as IPS, manages healthcare coverage and retirement funds for hundreds of thousands of formal private-sector workers across Paraguay. Because the institution relies on mandatory monthly payroll contributions from employers and employees to guarantee pension payouts, any disruption or freeze affecting its liquid reserves in commercial banks directly imperils the social safety net and provokes widespread public alarm.
Rejection of vice presidential impeachment
Alliana secured his succession to the top office on Thursday, when the Chamber of Deputies rejected a formal proposal to initiate impeachment proceedings against him. The legislative vote preserved his standing and enabled him to assume the presidency without facing an inquiry similar to the one that unseated Peña.
The two politicians had entered national executive office as running mates on the joint presidential ticket that won the Paraguayan general elections in 2023, representing the ruling Colorado Party.
Paraguay operates as a presidential republic where the president and vice president are elected together on a single ticket for a strict five-year term, with the national constitution prohibiting immediate presidential re-election. In circumstances where the presidency becomes permanently vacant due to resignation, disability, or removal by impeachment, the constitutional line of succession mandates that the sitting vice president assume executive power to serve out the remainder of the five-year mandate.
Political crisis and the Colorado Party
Prior to the outbreak of the Ueno bank scandal, Alliana had already announced his decision to step aside from his planned presidential bid. He had withdrawn his pre-candidacy ahead of the internal primary elections of the ruling Colorado Party in 2027 and the general elections scheduled for 2028.
The Colorado Party, known officially as the National Republican Association, has dominated Paraguayan politics for the vast majority of the past eight decades. The conservative political organization possesses an extensive network of local committees across the country, making its internal party primaries fiercely contested events that often determine the eventual outcome of national general elections.
With Alliana now formally installed in the presidential palace to lead the government through August 2028, Paraguay faces the task of managing the financial fallout from the Ueno bank intervention while judicial authorities proceed with the detention and legal prosecution of the ousted head of state.
