Press Release No. 03/93

Press Release: IMF Managing Director's Visit to Uruguay

June 23, 2003

Mr. Horst Köhler, Managing Director of the International Monetary Fund (IMF), issued the following statement today in Montevideo:

"This is my first visit to Montevideo as IMF Managing Director. The visit has provided my colleagues and myself a valuable opportunity to obtain a closer understanding of Uruguay's economic outlook and discuss the regional economic situation. Yesterday, I had the privilege of meeting with President Batlle and his economic team—Minister Atchugarry, Central Bank President de Brun, and other senior officials. I also met with political leaders and representatives of the banking and business community.

"I commended President Batlle on his government's firm pursuit of sound economic policies that has improved the economic and financial situation in Uruguay. In the face of severe economic shocks, the government has resolutely maintained prudent fiscal and monetary policies, as well as Uruguay's traditionally strong legal and institutional framework. This firm resolve has significantly contributed to the success of Uruguay's recent landmark debt exchange. Helped by strengthened policies, and an improving outlook in several other countries in the region, Uruguay's economy should return to positive growth in the second half of 2003.

"Uruguay now faces the challenge of consolidating these achievements to ensure sustained growth. Improving Uruguay's competitiveness and trade share in today's globalized world, and nurturing new areas of growth, are core to this challenge. The task has a number of dimensions that were the subject of our discussions. There was broad recognition of the need to build a strong intermediation role for the banking system, streamline the public sector and improve its savings and efficiency, and attract new private investments by making the business climate fully supportive—while retaining a well targeted social safety net that is consistent with fiscal capacity. There was agreement with the political and economic groups with whom I met of the need to build a strong domestic consensus for such structural changes that would decisively improve the living standards of all Uruguayans.

"I also discussed with President Batlle the regional and global outlook. We agreed that the regional outlook has improved, underpinned by strengthened policies in a number of countries to advance stabilization, fiscal sustainability, and structural reforms while paying attention to well-targeted social spending. I conveyed to President Batlle the IMF's unwavering commitment to work with the region to build strong growth with improved equity.

"I congratulate the Uruguayan people and their government for their firm commitment to taking the necessary steps to surmount the recent crisis and foster the resumption of growth. The IMF is proud to have been able to play a part in this process, and we look forward to continuing strong cooperation with the authorities. In that respect, the next step will be consideration by the Executive Board of the Fund of the third review under the Stand-By Arrangement, and I am hopeful that this review will be completed by mid-July."