Abstract
Uruguay’s First Review Under the Stand-By Arrangement and Request for Modification of Performance Criteria are discussed. Growth has slowed from the strong post-crisis recovery, and inflation has remained subdued. Export growth has been strong, and although a sharp recovery in imports contributed to an increase in the external current account deficit, capital inflows have helped raise international reserves. The government is developing a broad agenda of growth-enhancing reforms, focused on attracting more private investment as the key engine of future growth and social progress in Uruguay.
Since the issuance of the staff report, additional information on recent developments has become available. This information does not alter the thrust of the staff appraisal.
Performance criteria. The authorities have provided final data confirming that the end-June 2005 performance criteria for the primary surplus and the nonfinancial public sector debt were observed. The primary surplus of the combined public sector amounted to Ur$6,425 million, exceeding the corresponding adjusted PC by a margin of Ur$l,053 million. In turn, the nonfinancial public sector debt reached US$12,383 million, meeting the corresponding adjusted PC with a margin of US$142 million.
Recent economic developments
Real GDP in the second quarter increased by 3.0 percent (seasonally adjusted, quarter-to-quarter), or 7.5 percent year-on-year, led by consumption and export growth. This is in line with the program’s growth projection of 6 percent for 2005.
Fuel prices at the pump were raised by 6.25 percent on average on September 15, to reflect the increase in international oil prices.