Statement by the IMF Staff Representative

International Monetary Fund

doi:10.5089/9781451839395.002.A003

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Statement by the IMF Staff Representative

Author: International Monetary Fund

Publication Date:: 27 Apr 2007

eISBN:: 9781451839395

Language:: English

Keywords:: ISCR; CR; debt; government; tax reform bill; Uruguay; policy; central bank of Uruguay; gross debt; IMF staff representative; nonfinancial public sector; higher-than-expected bond placement; Public sector

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This paper discusses key findings of the Fifth and Sixth Reviews Under the Stand-By Arrangement (SBA) for Uruguay. Monetary and fiscal policies have been implemented as envisaged in the program. All quantitative performance criteria were met through end-September, except for the ceiling on public debt. In structural area, there was progress in financial sector reforms and, most importantly, the long-awaited tax reform is expected to be passed by Congress by the time of Board consideration of the reviews. However, the effort to secure tax reform delayed legislative initiatives in other areas.

Abstract

Since the issuance of the staff report, the following information has become available. It does not alter the thrust of the staff appraisal.

1. Prior action. The tax reform bill was passed by Congress on December 19, 2006, and is in line with the draft bill discussed in the staff report.

2. Performance criteria. Final data confirm that all end-September 2006 quantitative performance criteria have been observed, except for the ceiling on the nonfinancial public sector gross debt, which was missed by a margin of US$418 million, slightly more than the margin of US$340 million mentioned in the staff report (Table 1). The higher debt is fully reflected in net international reserves and government deposits in the central bank, implying no increase in net debt relative to program targets.

Table 1:

Performance Under the 2006 Economic Program ^1/

Sources: Ministry of Economy and Finance; and Central Bank of Uruguay.

^{^1/}As defined in the Technical Memorandum of Understanding.

^{^2/}Cumulative changes from the previous calendar year.

^{^3/}2006 targets are cumulative from end-September 2005.

^{^4/}All maturities.

^{^5/}Waiver requested based on the fact that the higher-than-expected bond placements were fully reflected in higher government deposits with the central bank and official international reserves.

Table 1:

Performance Under the 2006 Economic Program ^1/

		2006 Targets
	2005 Stock	Mar. 31				Jun. 30				Sept. 30
	Sept. 30	Target	Target (adj.)	Actual	Margin (+)	Target	Target (adj.)	Actual	Margin (+)	Target	Target (adj.)	Actual	Margin (+)
A. Quantitative performance criteria
	(In millions of Uruguayan pesos)
1. Combined public sector primary balance (floor) ^2/	n.a.	2,651	2,651	5,134	2,483	5,196	5,196	7,844	2,648	10,434	10,270	11,868	1,598
2. General government noninterest expenditure (ceiling) ^3/	n.a.	13,409	13,409	12,144	1,265	27,050	27,050	25,270	1,780	39,870	39,881	37,735	2,146
3. Net domestic assets of the BCU (ceiling) ^3/	51,525	−3,136	−7,382	−14,797	7,415	−6,029	−11,092	−18,637	7,545	−12,278	−36,112	−46,423	10,311
	(In millions of U.S. dollars)
4. Net international reserves of the BCU (floor) ^3/	−1,546	250	428	779	352	469	681	1,001	320	732	1,730	2,087	357
5. Nonfinancial public sector gross debt (ceiling) ^4/	12,309	12,882	13,087	12,324	763	13,074	12,670	12,565	105	13,082	12,196	12,613	-418^5/
6. Accumulation of external payment arrears of the public sector (on a continuous basis) ^2/	0	0	0	0	0	0	0	0	0	0	0	0	0
B. Indicative targets
	(In millions of Uruguayan pesos)
7. Combined public sector overall balance (floor) ^2/	n.a.	−3,076	−3,076	23	3,099	−5,394	−5,394	−2,267	3,127	−5,935	−6,099	−3,729	2,370
8. Combined public sector primary balance (extended) (floor) ^2/	n.a.	2,651	2,651	5,541	2,890	5,196	5,196	8,581	3,385	10,434	10,270	12,994	2,724
9. Monetary base (ceiling) ^3/	16,146	3,140	3,140	4,558	-1,418	5,118	5,118	4,799	319	6,075	6,075	3,910	2,165

Sources: Ministry of Economy and Finance; and Central Bank of Uruguay.

^{^1/}As defined in the Technical Memorandum of Understanding.

^{^2/}Cumulative changes from the previous calendar year.

^{^3/}2006 targets are cumulative from end-September 2005.

^{^4/}All maturities.

^{^5/}Waiver requested based on the fact that the higher-than-expected bond placements were fully reflected in higher government deposits with the central bank and official international reserves.

Table 1:

Performance Under the 2006 Economic Program ^1/

		2006 Targets
	2005 Stock	Mar. 31				Jun. 30				Sept. 30
	Sept. 30	Target	Target (adj.)	Actual	Margin (+)	Target	Target (adj.)	Actual	Margin (+)	Target	Target (adj.)	Actual	Margin (+)
A. Quantitative performance criteria
	(In millions of Uruguayan pesos)
1. Combined public sector primary balance (floor) ^2/	n.a.	2,651	2,651	5,134	2,483	5,196	5,196	7,844	2,648	10,434	10,270	11,868	1,598
2. General government noninterest expenditure (ceiling) ^3/	n.a.	13,409	13,409	12,144	1,265	27,050	27,050	25,270	1,780	39,870	39,881	37,735	2,146
3. Net domestic assets of the BCU (ceiling) ^3/	51,525	−3,136	−7,382	−14,797	7,415	−6,029	−11,092	−18,637	7,545	−12,278	−36,112	−46,423	10,311
	(In millions of U.S. dollars)
4. Net international reserves of the BCU (floor) ^3/	−1,546	250	428	779	352	469	681	1,001	320	732	1,730	2,087	357
5. Nonfinancial public sector gross debt (ceiling) ^4/	12,309	12,882	13,087	12,324	763	13,074	12,670	12,565	105	13,082	12,196	12,613	-418^5/
6. Accumulation of external payment arrears of the public sector (on a continuous basis) ^2/	0	0	0	0	0	0	0	0	0	0	0	0	0
B. Indicative targets
	(In millions of Uruguayan pesos)
7. Combined public sector overall balance (floor) ^2/	n.a.	−3,076	−3,076	23	3,099	−5,394	−5,394	−2,267	3,127	−5,935	−6,099	−3,729	2,370
8. Combined public sector primary balance (extended) (floor) ^2/	n.a.	2,651	2,651	5,541	2,890	5,196	5,196	8,581	3,385	10,434	10,270	12,994	2,724
9. Monetary base (ceiling) ^3/	16,146	3,140	3,140	4,558	-1,418	5,118	5,118	4,799	319	6,075	6,075	3,910	2,165

Sources: Ministry of Economy and Finance; and Central Bank of Uruguay.

^{^1/}As defined in the Technical Memorandum of Understanding.

^{^2/}Cumulative changes from the previous calendar year.

^{^3/}2006 targets are cumulative from end-September 2005.

^{^4/}All maturities.

^{^5/}Waiver requested based on the fact that the higher-than-expected bond placements were fully reflected in higher government deposits with the central bank and official international reserves.

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Uruguay: Fifth and Sixth Reviews Under the Stand-By Arrangement, Requests for Waiver of Nonobservance of Performance Criteria, and Financing Assurances Review: Staff Report; Staff Supplement; Staff Statement; Press Release on the Executive Board Discussion; and Statement by the Executive Director for Uruguay

Author: International Monetary Fund

Volume/Issue:: Volume 2007: Issue 146

Publisher:: International Monetary Fund

ISBN:: 9781451839395

ISSN:: 1934-7685

Pages:: 59

DOI:: https://doi.org/10.5089/9781451839395.002

Keywords

Table 1:

Performance Under the 2006 Economic Program ^1/

		2006 Targets
	2005 Stock	Mar. 31				Jun. 30				Sept. 30
	Sept. 30	Target	Target (adj.)	Actual	Margin (+)	Target	Target (adj.)	Actual	Margin (+)	Target	Target (adj.)	Actual	Margin (+)
A. Quantitative performance criteria
	(In millions of Uruguayan pesos)
1. Combined public sector primary balance (floor) ^2/	n.a.	2,651	2,651	5,134	2,483	5,196	5,196	7,844	2,648	10,434	10,270	11,868	1,598
2. General government noninterest expenditure (ceiling) ^3/	n.a.	13,409	13,409	12,144	1,265	27,050	27,050	25,270	1,780	39,870	39,881	37,735	2,146
3. Net domestic assets of the BCU (ceiling) ^3/	51,525	−3,136	−7,382	−14,797	7,415	−6,029	−11,092	−18,637	7,545	−12,278	−36,112	−46,423	10,311
	(In millions of U.S. dollars)
4. Net international reserves of the BCU (floor) ^3/	−1,546	250	428	779	352	469	681	1,001	320	732	1,730	2,087	357
5. Nonfinancial public sector gross debt (ceiling) ^4/	12,309	12,882	13,087	12,324	763	13,074	12,670	12,565	105	13,082	12,196	12,613	-418^5/
6. Accumulation of external payment arrears of the public sector (on a continuous basis) ^2/	0	0	0	0	0	0	0	0	0	0	0	0	0
B. Indicative targets
	(In millions of Uruguayan pesos)
7. Combined public sector overall balance (floor) ^2/	n.a.	−3,076	−3,076	23	3,099	−5,394	−5,394	−2,267	3,127	−5,935	−6,099	−3,729	2,370
8. Combined public sector primary balance (extended) (floor) ^2/	n.a.	2,651	2,651	5,541	2,890	5,196	5,196	8,581	3,385	10,434	10,270	12,994	2,724
9. Monetary base (ceiling) ^3/	16,146	3,140	3,140	4,558	-1,418	5,118	5,118	4,799	319	6,075	6,075	3,910	2,165

Sources: Ministry of Economy and Finance; and Central Bank of Uruguay.

^{^1/}As defined in the Technical Memorandum of Understanding.

^{^2/}Cumulative changes from the previous calendar year.

^{^3/}2006 targets are cumulative from end-September 2005.

^{^4/}All maturities.

^{^5/}Waiver requested based on the fact that the higher-than-expected bond placements were fully reflected in higher government deposits with the central bank and official international reserves.

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