Paraguay’s New President Orders His Whole Cabinet to Resign as Bank Crisis Deepens

November 10, 2026 Faizan Altaf

Paraguay’s new president, Pedro Alliana, has asked every minister in his government to resign, just three days after taking office in the middle of the country’s biggest banking crisis.

Alliana took power on Friday, 6 November 2026, after the Senate removed former president Santiago Peña from office over the collapse of Ueno Bank, a digital lender whose failure locked almost three million Paraguayans out of their money. On Monday, 9 November, Alliana moved to clear out the old government, named a new head of the central bank, and promised savers their money back.

Meanwhile, prosecutors searched Peña’s mansion and found a vault hidden behind a false wall, and teachers marched through the capital demanding the return of pension money caught up in the collapse.

What happened on Monday

On Monday, Alliana announced on X, the social media platform, that he had told his new chief of staff, Rolando de Barros, to ask ministers, secretaries and the most senior state officials holding positions of trust to submit their resignations.

“My goal is to strengthen coordination within the Government and ensure more efficient management,” Alliana wrote, adding that “all institutions will continue to operate with complete normality.”

Alliana was sworn in on Friday to serve the rest of Peña’s term, which runs until August 2028. As vice president, he automatically took over when Peña was removed, so no new election is needed.

He named Ariel Martínez as interior minister and Juan Carlos Baruja as public works minister, while Economy Minister Oscar Lovera and Foreign Minister Ruben Ramirez Lezcano kept their jobs. Congress elected Senator Antonio Barrios as vice president, filling the post Alliana left behind.

The cabinet shake-up is a familiar move for a new leader who wants to show that his government is different from the one that has just fallen. But it also carries risk. Paraguay is in the middle of a financial crisis, and a government in transition has to keep banks, pensions and public services running while it changes its top officials.

A new central bank chief

On the same day, Paraguay’s Congress named economist Jorge Schreiner as the new governor of the central bank. Alliana had put Schreiner’s name forward earlier on Monday, and senators approved him unanimously.

Schreiner replaces Carlos Carvallo, who was removed as central bank chief on Friday. Carvallo now faces criminal charges over alleged links to Ueno Bank and has been placed in pretrial detention.

The central bank is at the centre of this crisis. It was the central bank that seized Ueno on 3 November, after finding that the bank’s finances were in far worse shape than anyone had admitted. And it is the central bank that is now in charge of returning money to savers through a guarantee fund.

Schreiner takes over a difficult job: finishing the repayments to millions of depositors, keeping the rest of the banking system stable, and restoring trust in an institution whose former chief is now facing prosecution.

The raid on Peña’s mansion and the hidden vault

While Alliana was reshaping his government, prosecutors were widening their investigation into the former president.

On Sunday evening, prosecutors searched Peña’s summer mansion in San Bernardino, about 50 kilometres from the capital, Asunción. The search began shortly before 7 p.m. and was led by prosecutors Silvia Gonzalez, Christian Benitez and Elena Fiore, with police support.

Inside one of the rooms, investigators found a fitted panel that hid a corridor leading to an armoured door. They managed to open the first security door but were stopped by a second one. By Monday afternoon, the second door was still shut, and nobody outside the family appeared to know what lay behind it.

Local media reported that the second door had a sophisticated security system, but prosecutors have not confirmed those details. Prosecutor Benitez said specialists would advise on the best way to open it.

The house itself is part of the case. According to the indictment, Peña obtained two loans from Ueno worth about 500,000 dollars in 2024 to build the mansion, and his monthly mortgage payment of 38,000 dollars was six times his presidential salary. Prosecutors allege he used his influence in office to steer public money into the bank, although he had held shares in its parent company until March 2025.

Peña denies wrongdoing. His lawyer, Ricardo Preda, said he would plead not guilty and cooperate with investigators.

The hunt for money abroad

On Monday, prosecutors said they had asked the United States, Luxembourg and Argentina for help tracing and recovering assets linked to the collapsed bank.

“Work is underway to locate and secure assets abroad, in order to repatriate them and compensate the victims,” a prosecutors’ statement said.

The request widens an investigation in which prosecutors have already charged 27 people — and it raises the question that matters most to ordinary Paraguayans: how much of the missing money can be found and returned?

Prosecutors have asked a judge to freeze the assets of Peña and Carvallo. Six former Ueno directors have also been ordered into pretrial detention.

Peña has been charged with breach of trust and administration for personal gain, offences that prosecutors say could each carry a prison sentence of up to 10 years. On Saturday, Judge Humberto Otazu ordered him held in pretrial detention at the Presidential Escort Regiment, a military facility in Asunción.

Carvallo, who previously headed Ueno before becoming central bank chief, has been charged with breach of trust, producing false public documents and administration for personal gain, and has also been ordered into pretrial detention.

Opposition Senator Rafael Filizzola said on Friday: “We are facing the biggest corruption scandal in our democratic history.”

Teachers take to the streets

While investigators worked on the vault, public schoolteachers went on strike on Monday and marched through Asunción and other cities, in the first major protest to confront Alliana’s new administration.

The Federation of Paraguayan Educators said teachers were worried about the fate of about 60 million dollars in pension funds deposited at Ueno.

“We want the return of that money to be a priority,” the federation’s president, Silvio Piris, told Paraguay’s Channel 9.

The union also wants back money invested by the Social Security Institute (IPS), which manages pensions and health services for most workers. Lawmakers accuse Peña of allowing the institute to place about 355 million dollars at Ueno, beyond legal limits. The institute says that figure covers its entire portfolio across 14 banks, not just Ueno, so its exact exposure is disputed.

Teachers are also seeking an 8 percent salary increase and greater education funding in the 2027 budget, above the 5 percent pay rise agreed with the government in September.

The guarani, Paraguay’s currency, has lost about 8 percent of its value against the US dollar since the bank was placed under resolution.

How Ueno Bank collapsed

To understand the crisis, it helps to know how Ueno grew so fast, and how it fell apart.

Ueno launched as a digital lender in 2021, drawing customers with mobile banking, including Paraguayans who had never used a traditional bank. Licensed as a bank in November 2023, three months after Peña took office, it became a major lender within three years, handling state pensions and government accounts. By June 2026, it held about 850 million dollars in public funds, including state pension money.

On 3 November, the central bank began proceedings to wind down the lender after finding that its solvency ratio — a measure of whether a bank has enough of its own money to cover its risks — had fallen below half the regulatory minimum.

Regulators said the bank had made 146 million dollars in questionable loans to companies linked to its owner. Customers suddenly found they could not reach their money, and protests — some violent — erupted across the country.

Almost three million people lost access to their money when the central bank seized Ueno — in a country of only about seven million people, that is close to half the population.

Peña offered his resignation on 5 November, but Congress refused it and removed him from office the next day, with all 44 senators present voting in favour. He had come to power in 2023, and he had owned shares in the bank’s holding company until he sold them last year.

Alliana is not entirely removed from the investigation himself. He was named in a complaint concerning the Ueno affair that prosecutors are examining, although he has not been charged in the case. He has also confirmed that he held a certificate of deposit worth about 640,000 dollars at the bank. The Chamber of Deputies rejected a motion to impeach him by 48 votes to 30 while it approved the process against Peña.

What Alliana is promising savers

At his inauguration, Alliana pledged not to abandon the victims of the Ueno crisis, and on Monday he announced tax relief for those affected.

The central bank began returning deposits on Thursday through a guarantee fund. By Saturday it had paid back about 160 million dollars to nearly 1.2 million people, and the scheme was widened to another group of clients on Monday.

Deposits are guaranteed up to 75 monthly minimum wages, or about 37,000 dollars, and the fund must complete the guaranteed payments by 17 November.

The Social Security Institute said about 32,000 of its 90,000 pensioners had received benefits through Ueno and were being moved to other banks. Its president, Derlis Leon, said their next payments and annual bonuses would be made as scheduled on 17 November.

On Sunday, United States Secretary of State Marco Rubio called Alliana, according to the new president.

Why this matters beyond Paraguay

Paraguay is a small country, but the Ueno collapse is a warning that reaches far beyond its borders.

First, it shows how fast a digital bank can grow — and fail. Ueno went from a new mobile lender to a bank holding the pensions of tens of thousands of people in just three years. When it fell, it took the savings of nearly half the country with it.

Second, it shows what happens when political power and banking mix. The charges against Peña and Carvallo are only allegations, and both men deny wrongdoing. But the case raises a simple question for regulators everywhere: who checks the bank when the people meant to check it are close to the people who own it?

Third, it is a test of whether a country can hold its most powerful people to account. A president has been removed, charged and jailed. A central bank chief is in detention. Prosecutors are asking three foreign countries for help finding money. If the process works, it will be a rare example of a full reckoning. If it stalls, the savers who lost their money will be the ones who pay.

What happens next

Several dates and decisions are worth watching in the coming days:

The vault.

Prosecutors must still open the second door of the vault in San Bernardino. What is inside — if anything — could become important evidence, or a new embarrassment.

The asset hunt.

The requests to the United States, Luxembourg and Argentina will test whether money moved abroad can be found and brought back. That process can take months.

The 17 November deadline.

The guarantee fund must complete the guaranteed payments by 17 November, the same day the Social Security Institute has promised pensioners their next payments and annual bonuses.

The teachers.

The unions have warned they will keep pressing until the frozen pension funds are returned. If the money does not come back, the strike could grow.

The new cabinet.

Alliana’s new ministers will need to be named and approved. The resignations he demanded on Monday are the start of that process, not the end of it.

The trials.

Peña, Carvallo and the other charged officials face long legal proceedings. The charges carry up to 10 years in prison each, but the cases have only just begun.

For now, Paraguay has a new president, a new central bank chief, a jailed former president, a vault that will not open, and nearly three million people waiting for their money back.

Frequently asked questions

Who is Pedro Alliana?

Pedro Alliana, 52, was Paraguay’s vice president before becoming president on Friday, 6 November 2026, after the Senate removed Santiago Peña from office. He will serve the rest of Peña’s term, which runs until August 2028.

Why did Alliana ask all ministers to resign?

He said he wanted to strengthen coordination within the government and ensure more efficient management as he builds his own team. He told his chief of staff, Rolando de Barros, to ask ministers, secretaries and senior officials in positions of trust to submit their resignations.

What happened to Ueno Bank?

The central bank seized Ueno on 3 November 2026 after finding its solvency ratio had fallen below half the regulatory minimum. Regulators said the bank had made 146 million dollars in questionable loans to companies linked to its owner. Almost three million people lost access to their money.

How much money has been returned to savers so far?

The central bank said it had returned about 160 million dollars to nearly 1.2 million people through a guarantee fund between Thursday and Friday, and the scheme was widened to another group of clients on Monday. Deposits are guaranteed up to about 37,000 dollars, and the fund must complete the guaranteed payments by 17 November.

What is Peña accused of?

Peña has been charged with breach of trust and administration for personal gain, offences that prosecutors say could each carry up to 10 years in prison. He is accused of using his influence as president to steer government deposits to Ueno and of hiding the bank’s financial problems. He denies wrongdoing and his lawyer says he will plead not guilty.

What was found in the raid on Peña’s home?

Prosecutors searching his mansion in San Bernardino on Sunday found a vault hidden behind a false wall. They opened the first security door but were stopped by a second one, still shut on Monday afternoon.

Conclusion

Three days into his presidency, Pedro Alliana has cleared out the cabinet, replaced the central bank chief, and promised savers their money back. It is a fast start, but the hardest work is still ahead.

Prosecutors must still open a vault, trace money across three countries, and prove their case against a former president and a former central bank chief. The guarantee fund must meet its 17 November deadline, and teachers are already on the streets demanding pension money that may take far longer to recover.

Paraguay’s crisis began with a bank that grew too fast and was checked too little. Whether the country comes out of it stronger will depend on whether the new government can do two things at once: return the money, and show that nobody — not even a president — is above the law.

Sources

This article is for general information and education only. It is not legal or financial advice.

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