Although Lugo first appeared on the political scene only in early 2006, he won a convincing victory in the April 20 presidential elections:

· Preliminary official figures, with 92% of votes counted, gave him 41% on a 68% turnout, despite a vicious Colorado Party smear campaign.

· Blanca Ovelar, the defeated Colorado candidate, with 31%, was quick to accept defeat, thereby defusing tensions in Paraguay's volatile political atmosphere.

· Lino Oviedo, the maverick former army chief, received 22%, while Pedro Fadul, founder and head of the modernising pro-business party, Patria Querida, saw his vote slump from 21% in 2003 to 2%.

Lugo, who will take office on August 15, has committed to a platform of progressive social and economic change to address gross income inequality, the worst in Latin America after Brazil and Guatemala. This involves targeted poverty reduction programmes, support for small farmers through land reform and combating endemic corruption. However, his programme remains fuzzy, with little on the specifics of reform. He has said that a rural cadastre will be carried out urgently to determine ownership prior to land reform, and Paraguay's decrepit public health system will be declared an 'emergency'.

Political challenges. The political challenges facing Lugo are considerable:

· Although final results are not yet out, it is clear that he will face a very conservative Congress, with the Colorados narrowly remaining the largest party. They are followed by the Partido Liberal Radical Autentico (PLRA), Lugo's ally in the Alianza Patriotica para el Cambio (APC), which made very significant gains, and Oviedo's UNACE.

· Provisional figures suggest that the number of Colorado deputies in the 80-member Lower House fell from 37 in 2003 to 31, with the number of PLRA deputies possibly reaching 28.

· The number of PLRA senators may exceed that of the Colorados.

· However, the left-wing movement that backed Lugo will have minimal representation in Congress, basically because Lugo's Movimiento Popular Tekojoja (MPT) and the Movimiento al Socialismo (MAS) could not agree on fielding joint candidates. There will only be two left-wingers in the 45-member Senate.

As a result, the APC will not have an absolute majority in Congress, which retains extensive powers under Paraguay's 'weak president' system, which the 1992 Constitution designed in reaction to the excesses of General Alfredo Stroessner's dictatorship (1954-89). It has already opened negotiations with Oviedo's UNACE, offering them the presidency of the Senate in exchange for support. The Colorados won ten of the 17 posts as heads of regional governments, with the PLRA picking up six, more than ever before.

Lugo will benefit from bitter recriminations inside the divided Colorado camp, following its electoral defeat. Outgoing President Nicanor Duarte Frutos is widely blamed for having imposed Ovelar's candidacy against the wishes of party activists. Although Duarte engineered his place as head of the party list for the Senate, his presence as a senator will do much to split the Colorado vote, something that will be greatly advantageous to the APC when pushing through reform legislation. Luis Castiglioni, the defeated candidate in the December 2007 Colorado primary, said his Vanguardia Colorada faction would not recognise Duarte's leadership. It will operate as a separate block in Congress but is likely to adopt robust opposition to Lugo's reform programme as Castiglioni projects himself as candidate for party leader in elections scheduled for 2010.