He Center for Studies for Economic and Social Reality (Ceres) presented his perspectives for Uruguay “in a tense world”, with the challenges that the next government will have to face, regardless of the party or coalition that wins the elections elections in October or November, if there is a second round. The little margin of movement tax situation and the need for a state reformkey points in the dissertation given by the organization’s executive director, Ignacio Munyo.
That the next government will have little margin in tax matter It is something that has been talked about for a long time. For this reason, the increase or reduction of taxes It was established as one of the campaign themes par excellence – at least, as far as the economic level is concerned -, and the majority of the pre-candidates promise not to increase the taxes that already weigh on the pockets of Uruguayans.
The truth is that, even if they wanted to, raising taxes will not be an option, even when the fiscal deficit in the short and medium term stagnates at around 4%, according to Munyo. So how to address the need for more funding?
“All campaign proposals are important for development, but they all imply more spending. We cannot raise taxes, so we must transform spending and that is why we made a comprehensive review of public spending that we leave at the disposal of the next government,” he noted during the exclusive event for Ceres members.
For Munyo, the key will be a reform of the State that uses the budget more efficiently, starting with a reduction of agencies that “have similar powers or objectives”, which are multiple across the various ministries.
“We saw it in Defense, infrastructure, transportation and communications”, said the executive director and continued: “We focus on Housing, SMEs and Early Childhood, and we found a great dispersion of entities by areas that have the same tasks. This dilutes responsibilities and makes it difficult to achieve the final objective.”
According to Ceres’ analysis, these issues will have to be reviewed both in the final stretch of the current administration – which still has more than eight months left – and by the next government, whoever wins the elections.
New responses to the exchange rate delay
Regarding the value of dollar, a topic that is also controversial in the economic debate and, mainly, of the Uruguayan competitiveness, Munyo pointed out the importance of the exchange rate in relation to inflation control.
Beyond the fact that the director of Ceres considers that in the country there is no exchange rate delay but rather a delay in reforms, during the presentation of the perspectives for the coming months he pointed out that if the dollar reaches 45 pesos, as demanded by the business and export chambers, inflation would be 9.1%; well above the values estimated for the end of the year and the target range stipulated by the Central Bank of Uruguay (BCU).
“The subsidy that represents a high dollar. To be competitive we must improve international insertion, readjust tax incentives, simplify bureaucracy, modernize labor regulation and reduce tariffs,” he said.
Source: Ambito
