Paraguay's new President Santiago Peña promised at his swearing-in ceremony on Tuesday to make investments in education, health care and security to help lift the economy.

"The best social policy there is healthy economic growth from which everyone can benefit," the conservative politician said in the capital Asunción.

Peña's conservative Colorado Party has held power nearly continuously for eight decades.

The 44-year-old economist and former finance minister defeated his centre-left challenger Efraín Alegre by 15 percentage points in April's election.

Peña has criticized the European Union's demands for stricter environmental regulations in the long-stalled free trade agreement with South America's Mercosur states - Brazil, Argentina, Uruguay and Paraguay - as too harsh.

"We will continue to negotiate, but without giving up our sovereignty, values and culture," he said in his inaugural speech.

Paraguay has almost 7 million inhabitants and is the only country in South America apart from Bolivia without access to the sea. Its main exports are soya, electricity and beef.