Inside the Cheapest City in the World

Pastries at the football

Article by: Rob Crossan, September 2007

Cathedral de Asuncion

With a bundle of decrepit banknotes in my pocket, I stroll the narrow boulevard of Palma, a mix of 60's-style financial buildings and Spanish colonial relics that stretches for miles across downtown Asuncion. The harsh heat and the dizzying array of bargains on offer from somnambulant street vendors is making me thirsty. I stumble across a darkened cafe where two waiters with moustaches the size of cactus branches sit asleep on the porch. I nudge them from their slumber and order a glass of wine.

Not yet au fait with the currency of Paraguay, I place the smallest denomination I have on the table. The moustaches wiggle in surprise. Within minutes, four whole bottles of very decent Chilean wine land on my table. 'Friends come soon?' one moustache enquires. I thought I knew what a bargain was, but it seems Asuncion was going to make me seriously reassess the concept.

Sullied by smuggling, corruption and previous dictatorships, Paraguay doesn't have the most gleaming reputation

Paraguay is firmly off the backpacker trail at the moment, with most travelers shunning it in favour of neighboring Brazil and Argentina. The sleepy capital of Asuncion may be worlds away from the vibrant hub of Sao Paulo, but tops it in at least one respect - it's dirt cheap. Every year, global human resources company Mercer compiles a 'cost of living' survey which rates every capital city on earth on affordability using factors such as rent, beer prices, petrol and bus fares. Moscow took this year's crown as the number one wallet-thinner, beating off stiff competition from London and Tokyo. And then, 143 places below, and for the fifth year running, there's Asuncion, taking out the title of Cheapest Place on Earth.

Sullied by smuggling, corruption and previous dictatorships, Paraguay doesn't have the most gleaming reputation. These factors have pushed Paraguay towards the bottom of the list of backpacker destinations. However, the curious traveler will be pleasantly surprised to learn that, bargains aside, Paraguay is fantastic driving country. Bigger than Germany but with a population of only six million, the winding asphalt that snakes through the empty savannahs and lonely ranches of the interior throw up some impressive sights. There's the Itaipu Dam, (the second largest in the world and one which supplies power to half of Brazil), while the east of the country hosts many Jesuit ruins. These attempts at Utopian communities were built in the first half of the 18th century and were home to thousands of Guarani Indians working for God, cultivating crops and making religious artefacts without ever knowing the concept of money. The most impressive is Trinidad, a Unesco heritage site where you can stroll around the substantial remains of a 'reduction' that once held 4000 people. The cappuccino-coloured sandstone remains of homes, churches and workshops scattered around a huge plaza (whose knee-high grass is now popular with parrots) are an impressive monument to this vast social experiment.

I stumble across a darkened cafe where two waiters with moustaches the size of cactus branches sit asleep on the porch

Then there's the Chaco, an immense dry seabed that takes up half the country (yet is only four percent of the population) and is, along with the Amazon, South America's last great wilderness. Countless rare bird species thrive in the area while rumours abound that George W Bush has a 100,000 acre hideaway deep in the region, ready to be utilized in any 21st-century 'water war' over access to the huge underground water reserve known as the Guarani Aquifer.

So it seems that Paraguay might be light on the wallet, but heavy on rewards for the rough-and-ready traveller.