He Ministry of Economy and Finance (MEF) announced that the government made the decision to recapitalize the Central Bank of Uruguay (BCU), because the entity’s assets do not comply with the amounts provided by law.
Through a statement, the MEF detailed that “as of December 31, 2022, the assets of the Central Bank of Uruguay are below the minimum provided by article No. 8 of Law No. 16,696 of March 30, 1995 ”.
As a consequence, the government of Luis Lacalle Pou will present, in the coming weeks, a capitalization plan for the BCU, to be finalized throughout this year.
The financial statements of the Central Bank, presented at the end of last year and which have not yet been approved by the Court of Accountsshowed that the wealth of the monetary authority is -8,055 million pesos, a considerable variation taking into account the numbers of 2021 when the same indicator was 47,722 million pesos.
The change in the BCU accounts during the last year was due to the variation in the special reserve corresponding to article 9 of the Organic Charter, which went from 4,199 million pesos in 2021 to 15,237 million pesos in 2022. Thus, the result of the year last year it was in red. It was -57,985 million pesos.
Why was the BCU patrimony reduced?
Law 16,696 mentioned by the Ministry of Economy and Finance to open the process of capitalization of the Central Bank is nothing less than the Organic Charter of the institution.
Its article 9 establishes the creation of reserves, after the closing of the financial year, in case there are net profits.
The existing reserves in the BCU’s equity correspond to the profits generated in previous years, minus the Reserves applications of this chapter provided for in the final paragraph of Article 9 of the CO
According to the data from the last financial year of the entity, in 2021 34,790 million pesos were allocated to the partial amortization of capitalization bonds for that concept. While in the 2022 financial year, reserves were not affected for the partial amortization of capitalization bonds.
The balance as of December 31 of the item “Reserves Article 9” amounts to 21,918 million pesos.
The net result of the last fiscal year was a loss of 57,985 million pesos, not having generated profit from the adjustment in the value of assets and liabilities in foreign currency, gold and special drawing rights, therefore it is not appropriate to establish the special reserve of Article 9 or transfer net profits to the National Treasure.