He International Monetary Fund (IMF) warned about the levels of debt that keeps Uruguay regarding the pre-pandemic, and warned that, after the drought that is plaguing the country, the government will have to make an effort to “place the debt on a downward path”.
The IMF issued its report on the country’s economy, and although it highlighted as positive several policies of the management of Luis Lacalle Pou at the head of Government Centraland of lily arbeleche in charge of Ministry of Economy and Finance (MEF); he also pointed out that debt levels should be the priority once the effects of the drought have been overcome.
In this sense, the international organization recognized that the efforts to reduce indebtedness after the Covid-19 pandemic “are laudable”, but “the debt-to-GDP ratio is at historically high levels”.
How did the Uruguayan debt evolve?
In 2019, according to data from the Debt Management Unit (UGD) of the MEF, net debt was 27,634 million dollars. This represented about 45% of the Domestic Gross Product which, with a growth of 0.4%, that year reached 61,230 million dollars.
In 2020, for its part, the worst year of the pandemic in terms of its economic effects in the country and in the world, and the first year of the government of Lacalle Pou, the GDP fell by 6.1% and totaled 53,560 million dollars. Regarding the external debt, the first jump is seen after a few years of relative stabilityreaching 30,120 million dollars and representing 56.14% of GDP.
In 2021, slight improvements in the country’s income began to be seen, although the public debt increased again, this time to 32,726 million dollars.
But in 2022 —still taking into account preliminary results from the MEF— the great leap occurred in the debt levels that alerted the IMF, when the indebtedness reached 37.979 million dollars. In the third quarter of 2022, debt rose 5.5% year-on-year, and in September it represented 67.6% of GDP.
The big difference is the tax situation of Uruguay, which for the government’s economic team is “comfortable”. In this sense, although the levels of indebtedness increased, so did the GDP by 5% during 2022, with record export levels and fiscal consolidation that began to be noticed in the macroeconomic figures.
Thus, the debt represented the 62% of GDP. And although it still constitutes more than half of the monetary value of Uruguay, the State understands that the improvements in the ratings of different international financial institutions, together with the economic measures taken in recent times, are signs that the debt-GDP ratio it will continue to improve, even in a slowdown scenario.
Source: Ambito
