In politically explosive measures now before the National Congress, the government declared the farmers had enjoyed windfall earnings because of a global spike in commodity prices and could afford to pay taxes on agricultural and livestock exports.

Officials say the export taxes would raise funds to meet the shortfall -- nearly 2.5 percent of Paraguay's gross domestic product -- but analysts said the landlocked country's tax collection system wasn't equipped to meet the optimistic revenue generation targets set by the government.

There was no immediate reaction from the farmers' groups but senior officials admitted the taxation proposals raised "sensitive issues" that could affect both the political landscape of Paraguay and the country's export trade.

Critics say both the budget and the government's financial planning are in disarray. When the discussion of introducing the taxes first went before Congress, government planners presented estimates of an original fiscal deficit of 0.8 percent of GDP. By the time the final version of the financial figures was approved in Congress, the deficit had gone up to 2.5 percent of the GDP.

"We are requesting the support from Congress since these are sensitive issues and we need to increase revenue," said Finance Minister Dionisio Borda after talks on the taxation issue in Congress.

He said the taxation bill could go before Congress for debate and approval as early as March.

Congressional leaders said they sympathized with the government's need to raise much needed revenue through taxation.

Alongside the farm taxes, the government is looking into introducing an income tax, a proposal backed by the World Bank.

Industry analysts said lawmakers would need to weigh carefully the consequences of the proposed taxes on the country's agricultural and livestock trade.

The draft bill proposes a tax of up to 6 percent on grains and oilseeds and a 5 percent levy on beef exports. Although officials say that part of the funds raised through taxation would go into infrastructural projects, they admit the government priority is to reduce the deficit.

Finance Ministry documents showed 45 percent of the deficit arose from the creation by Congress of 5,800 government jobs including 2,468 in the judiciary, MercoPress reported.

Paraguay is among the world's main exporters of beef and soybeans and earned more than $1 billion from meat exports in 2010.

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