The risk rating agency Fitch Ratings He pointed out that Uruguay is far from meeting its goals fiscal consolidation This year, a reality that is repeated in most countries of Latin America.
“Fiscal positions in Latin America generally began to deteriorate in 2023, after of post-pandemic recoveries surprisingly strong in 2021-2022. This deterioration has continued in 2024,” the agency said in its fiscal target report.
Fitch Ratings identified the increase in the deterioration as the cause of this primary expenditure due to indexing, which still captures the effects of the greater inflation past, budget increases and the countercyclical spending.
Regarding Uruguaythe agency – which in June ratified the classification BBB of Uruguayan debt – highlighted the increase in the fiscal deficit, recalling that in 2023 it was -3.3% and that in the last 12 months to last June it rose to -3.4%, moving away from the government’s goal for the end of the year of -2.9%.
Regarding the country’s fiscal dynamism, he indicated that while income growth in real terms was 3.63% year-on-year, expenditure growth rose to 4.49% year-on-year, based on data from April. “Uruguay expects that it will not reach its target,” he stressed.
In March, the rating agency had stated that the fiscal rule helps the country’s credibility, but clarified that reducing the deficit will be key to a future improvement in the investment grade.
How is the rest of Latin America doing with its fiscal goals?
Fitch Ratings noted that “most countries that have formal fiscal goals are not on track to meet them this year” and gave as an example the cases of Brazil, Chili and Colombiawhere governments are implementing spending cuts to reduce projected deviations from fiscal targets, although these are expected to be insufficient to achieve them.
Regarding Argentina“Idiosyncratic circumstances are driving fiscal improvement” through “ambitious consolidation programs to avoid an economic crisis,” he said, something that is also happening in Ecuador.
Source: Ambito
