## cr1728 — Uruguay: IMF Staff Report (selected excerpts)

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### Outlook and growth
- Real GDP growth:
  - 2016: 1.2 percent
  - 2017: 1.4 percent
  - 2018: 2.6 percent
  - 2019: 3.4 percent
  - 2020: 3.3 percent
  - 2021: 3.1 percent
- Growth drivers:
  - An improving external environment together with private consumption.
- Output gap (percent of potential output):
  - 2015: 0.8 percent
  - 2016: -0.6 percent
  - 2017: -1.7 percent
  - 2018: -1.7 percent
  - 2019: -0.9 percent
  - 2020: -0.3 percent
  - 2021: 0.0 percent

### External sector — current account, reserves, and external financing
- Exchange rate movements and reserves:
  - Peso depreciated by 23 percent in 2015; depreciated by 8 percent between January and March 2016; appreciated by 6 percent year through October 2016.
  - After U.S. elections in November 2016, depreciation pressures reemerged.
  - Gross official reserves (US$ millions):
    - 2016: 13,637
    - 2017: 14,057
    - 2018: 14,957
    - 2019: 15,937
    - 2020: 16,887
    - 2021: 17,877
  - Overall balance of payments (US$ millions):
    - 2016: -2,000
    - 2017: 420
    - 2018: 900
    - 2019: 980
    - 2020: 950
    - 2021: 990
- Current account and financing:
  - Current account deficit:
    - 2015: -2.3 percent of GDP
    - 2016: -2.2 percent of GDP (expected to remain around 2¼ percent in 2016)
    - 2017 projection: -2.3 percent of GDP
    - 2017–2021 projections: around -2.3 to -2.5 percent of GDP
  - FDI fully financed the CAD in 2015: inflows of 2.4 percent of GDP in 2015.
  - In July (2016), government reopened dollar bonds maturing in 2027 and 2050, raising U.S.$1.15 billion at spreads of +205bp and +275bp respectively.
- External debt and indicators:
  - Total external debt + non-resident deposits (percent of GDP):
    - 2016: 53.9
    - 2017: 54.5
    - 2018: 54.9
    - 2019: 54.8
    - 2020: 54.5
    - 2021: 54.8
  - External public debt (percent of GDP):
    - 2016: 35.1
    - 2017: 36.0
    - 2018: 36.3
    - 2019: 36.3
    - 2020: 36.1
    - 2021: 36.4

### Exchange rate dynamics and REER
- Nominal and real movements:
  - Peso: 23 percent depreciation in 2015; further 8 percent depreciation Jan–Mar 2016; 6 percent appreciation through October 2016.
  - REER: depreciated 4.5 percent over 2015; appreciated by 6 percent through September 2016.
- Valuation assessments:
  - EBA current account model (October 2016) indicated REER remains in line with fundamentals and desirable policy settings (Annex 1).
  - EBA and ES approaches produced differing signals (examples: cyclically-adjusted CA norm -3.6 vs. estimated -2.1; other approach suggested 2.8 percent overvaluation).

### Inflation and monetary policy
- CPI inflation (average):
  - 2016: 9.7 percent
  - 2017: 7.9 percent (projection)
  - 2018: 7.6 percent (projection)
  - 2019: 7.1 percent (projection)
  - 2020: 6.6 percent (projection)
  - 2021: 6.4 percent (projection)
- CPI inflation (end of period):
  - 2016: 8.5 percent
  - 2017: 8.3 percent (projection)
  - 2018: 7.2 percent (projection)
  - 2019: 6.7 percent (projection)
  - 2020: 6.4 percent (projection)
  - 2021: 6.3 percent (projection)
- Recent developments:
  - Inflation peaked at 11 percent (y-o-y) in May 2016; headline inflation fell to 8.1 percent (y-o-y) in November 2016.
  - Administered prices comprise 23 percent of the CPI basket.
  - Items at least partly quoted in dollars make up 13 percent of the CPI basket.
  - Pass-through estimates: overall pass-through below 10 percent; for items quoted in U.S. dollars pass-through around 30 percent.
- Monetary policy stance and actions:
  - Central bank tightened reserve requirements in April 2016 and lowered reference range for narrow money (M1+) growth; range lowered again in July to 1–3 percent.
  - Short-term (one month) interest rates fluctuated between 11 and 13 percent after peaking at 15 percent in April.
  - Reserve requirements were raised and equalized for peso and dollar deposits at 28 percent in April.

Policy recommendations (monetary)
- Maintain relatively tight monetary policy to guide inflation toward target range; tighten further if activity recovers during 2017.
- Reduce inflation persistence via wage-setting reforms and elimination of backward inflation indexation.
- Strengthen transmission: de-dollarization, develop local-currency capital markets, consider standing facilities to create an interest rate corridor.

### Fiscal policy and public debt
- Public sector balances and debt:
  - Public sector deficit: estimated at 3.8 percent of GDP in 2016.
  - Overall balance (percent of GDP):
    - 2016: -3.8
    - 2017: -3.4
    - 2018: -2.9
    - 2019: -2.5
    - 2020: -2.6
    - 2021: -2.6
  - Primary balance (percent of GDP):
    - 2016: -0.4
    - 2017: -0.3
    - 2018: 0.3
    - 2019: 0.6
    - 2020: 0.7
    - 2021: 0.8
  - Gross public sector debt (percent of GDP):
    - 2016: 61.1
    - 2017: 63.5
    - 2018: 64.7
    - 2019: 64.3
    - 2020: 64.1
    - 2021: 64.0
  - Public sector debt net of liquid financial assets (percent of GDP):
    - 2016: 42.6
    - 2017: 44.4
    - 2018: 44.5
    - 2019: 44.3
    - 2020: 44.2
    - 2021: 44.2
- Fiscal actions and projections:
  - Parliament approved tax increases and expenditure cuts for 2017, implying a 1 percent of GDP fiscal adjustment and targeting a 2.5 percent deficit by 2019.
  - Public investment significantly decreased in 2015; 2017 package should protect infrastructure investment.
- Debt dynamics and stress tests:
  - Baseline projection: gross debt stabilizes around 64 percent of GDP in 2021.
  - Stress: combined permanent 20 percent exchange rate depreciation plus temporary growth and primary balance shocks and permanent higher real interest rates would raise gross debt by about 18 percentage points over five years and net debt by 13 percentage points.
  - Under the combined shock, gross public debt would remain below 72 percent of GDP in 90 percent of cases; net public debt would remain below 56 percent of GDP.

Policy recommendations (fiscal)
- Implement the 2017 fiscal consolidation package in a manner that supports the nascent recovery, allowing automatic stabilizers and supporting infrastructure investment.
- Over the medium term, adopt stronger fiscal anchors (consider adding an overall debt limit to the fiscal rule) to enhance credibility and expand scope for countercyclical policy.
- Monitor public enterprises' management and profitability; allow retail fuel prices to adjust with international oil prices when feasible.

### Financial sector, credit, and stability
- Key indicators and structure:
  - Credit is around 30 percent of GDP.
  - Deposit dollarization: 80 percent; credit dollarization: 56 percent.
  - Non-performing loans: 3.5 percent of total loans (2016).
  - Regulatory capital rose to 12.9 percent of risk-weighted assets in 2016.
  - Liquidity ratio: 56.3 in 2016.
  - Deposits/Loans ratio in national currency: 0.7 in 2016; in foreign currency: 2.5 in 2016.
- Vulnerabilities and buffers:
  - Large share of equity in foreign financing (41 percent).
  - Gross international reserves of the central bank equal to 29 percent of GDP.
  - Liquid FX assets cover 2.5 times non-resident deposits.
  - Long average maturity of NFPS debt (14 years).
- Financial development and supervisory recommendations:
  - Reduce dollarization to improve monetary policy transmission through commitment to low inflation and regulatory incentives (differentiated reserve requirements by currency).
  - Deepen local currency capital markets to support peso funding and credit.
  - Enhance scrutiny of banks’ credit risk exposures; implement IFRS in 2017 and Basel III measures (capital surcharges for systemically important banks).

### Structural policies, inclusion, and competitiveness
- Financial inclusion and peso funding:
  - 2014 Financial Inclusion Law requires employees to designate bank account for wages; private banks can increase peso funding through payroll accounts and incentives.
  - Creation of new saving vehicles in peso should include investor protection and financial education.
- Education and labor:
  - Education reform needed to improve PISA scores and reduce dependence of student performance on socioeconomic conditions.
  - Female labor force participation around 55 percent; about 17 percentage points below male participation.
  - Policies to raise female participation: increase affordable public child care and extend paternity leave.
- Trade and competitiveness:
  - Exports to Mercosur fell from 55 percent in 1998 to 21 percent by 2015.
  - Recent trade agreement with Chile and Mercosur–EU negotiations expected to benefit exports.
  - Creation of a national system of competitiveness and reforms to promote innovation announced in 2015.

### Risks and vulnerabilities
- External risks:
  - Slower-than-expected recovery in Argentina and Brazil, weaker growth in China, tightening global financial conditions, and potential withdrawal by non-resident holders of public debt (almost 58 percent share in 2015).
- Domestic risks:
  - Limited room for countercyclical policy; weaker-than-expected growth in 2017 could accentuate tradeoff between fiscal consolidation and avoiding pro-cyclicality.
- Mitigating factors:
  - Strong liquidity buffers, high gross reserves, flexible exchange rate regime, and capacity to use buffers to smooth shocks.
- Upside risk:
  - Potential large foreign investment (about 7 percent of GDP) in a third pulp mill.

### Executive Board assessment and key policy recommendations
- Assessment highlights:
  - Uruguay managed regional recessions relatively well; growth started to recover in Q3 2016.
  - The current account deficit has been cut in half since 2014; international reserves stabilized well above prudential norms.
  - Real effective exchange rate appears aligned with fundamentals and desirable policy settings.
- Main policy advice (selected):
  - Implement the 2017 fiscal consolidation package while supporting recovery and infrastructure investment.
  - Allow automatic fiscal stabilizers to operate along the structural consolidation path.
  - Maintain tight monetary conditions to support disinflation; reduce wage indexation and inflation inertia.
  - Promote de-dollarization via lower inflation and deeper local-currency capital markets.
  - Preserve exchange rate flexibility to absorb external shocks.
  - Pursue structural reforms in education and trade liberalization to boost potential growth.

*Source: URUGUAY STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION (IMF staff report).*

### 1.4  percent in  2017,  as the external  environment  strengthens,  together  with  private  consumption.

### cr1728 - 1.4  percent in  2017,  as the external  environment  strengthens,  together  with  private  consumption.

### Outlook and growth
- Real GDP growth:
  - 2016: 1.2 percent
  - 2017: 1.4 percent
  - 2018: 2.6 percent
  - 2019: 3.4 percent
  - 2020: 3.3 percent
  - 2021: 3.1 percent
- Growth drivers: an improving external environment together with private consumption.
- Output gap:
  - 2015: 0.8 percent of potential output
  - 2016: -0.6 percent
  - 2017: -1.7 percent
  - 2018: -1.7 percent
  - 2019: -0.9 percent
  - 2020: -0.3 percent
  - 2021: 0.0 percent

### External sector
- Exchange rate and reserves:
  - The peso appreciated against the U.S. dollar between April and October 2016; depreciation pressures reemerged in November 2016.
  - Current account deficit: expected to remain around 2¼ percent of GDP in 2016, and would edge up to 2½ percent in the medium-term as domestic demand recovers.
  - Gross official reserves (US$ millions): 2016: 13,637; 2017: 14,057; 2018: 14,957; 2019: 15,937; 2020: 16,887; 2021: 17,877.
  - Overall balance of payments (US$ millions): 2016: -2,000; 2017: 420; 2018: 900; 2019: 980; 2020: 950; 2021: 990.
- External debt and indicators:
  - Total external debt + non-resident deposits (percent of GDP): 2016: 53.9; 2017: 54.5; 2018: 54.9; 2019: 54.8; 2020: 54.5; 2021: 54.8.
  - External public debt (percent of GDP): 2016: 35.1; 2017: 36.0; 2018: 36.3; 2019: 36.3; 2020: 36.1; 2021: 36.4.
  - Current account balance (percent of GDP): 2016: -2.2; 2017: -2.3; 2018: -2.3; 2019: -2.4; 2020: -2.5; 2021: -2.5.

### Inflation and monetary policy
- CPI inflation (in percent, average):
  - 2016: 9.7 percent
  - 2017: 7.9 percent
  - 2018: 7.6 percent
  - 2019: 7.1 percent
  - 2020: 6.6 percent
  - 2021: 6.4 percent
- CPI inflation (in percent, end of period):
  - 2016: 8.5 percent
  - 2017: 8.3 percent
  - 2018: 7.2 percent
  - 2019: 6.7 percent
  - 2020: 6.4 percent
  - 2021: 6.3 percent
- Staff projections and policy stance:
  - Inflation is projected to slow and remain well below 9 percent in 2017, tapering to about 6 percent in the medium-term as the output gap gradually closes.
  - Monetary policy remains relatively tight but transmission has been constrained by high dollarization and low level of peso credit.
  - Recommendation: a tight monetary policy will be needed to help guide inflation toward the target range; the stance should be tightened further if and when activity recovers during 2017 to sustain disinflation.
  - Lowering inflation persistence via the wage-setting process and further elimination of backward inflation indexation is advised.

### Fiscal policy and public debt
- Public sector balance:
  - Public sector deficit: estimated at 3.8 percent of GDP in 2016.
  - In line with government objective to reach a 2.5 percent deficit by 2019, parliament approved tax increases and expenditure cuts for 2017.
  - Overall balance (percent of GDP): 2016: -3.8; 2017: -3.4; 2018: -2.9; 2019: -2.5; 2020: -2.6; 2021: -2.6.
  - Primary balance (percent of GDP): 2016: -0.4; 2017: -0.3; 2018: 0.3; 2019: 0.6; 2020: 0.7; 2021: 0.8.
  - Gross public sector debt (percent of GDP): 2016: 61.1; 2017: 63.5; 2018: 64.7; 2019: 64.3; 2020: 64.1; 2021: 64.0.
  - Public sector debt net of liquid financial assets (percent of GDP): 2016: 42.6; 2017: 44.4; 2018: 44.5; 2019: 44.3; 2020: 44.2; 2021: 44.2.
- Policy guidance:
  - Implement the fiscal consolidation package for 2017 in a manner that supports the nascent recovery, allowing automatic stabilizers and supporting infrastructure investment.
  - Over the medium term, stronger fiscal anchors could enhance credibility and expand scope for counter-cyclical fiscal policy.
  - Protect announced infrastructure investment increases; public investment significantly decreased in 2015.

### Financial sector and stability
- Financial soundness:
  - Non-performing loans: 3.5 percent of total loans.
  - Provisions: described as high.
- Financial development recommendations:
  - Reduce dollarization to improve monetary policy transmission through commitment to low inflation, regulatory incentives such as reserve requirements differentiated by currency, and initiatives to deepen local currency capital markets.
  - Enhance scrutiny of banks’ credit risk exposures.

### Risks and vulnerabilities
- External risks:
  - Slower than expected recovery in Argentina and Brazil, and weak growth in China, would weigh on Uruguay’s economy.
  - A tightening in global financial conditions could raise cost of financing and increase capital flow volatility.
- Domestic risks:
  - Limited space for countercyclical policies means slower than expected growth in 2017 would accentuate the tradeoff between announced fiscal consolidation and avoiding an overly pro-cyclical stance.
- Mitigating factors:
  - Uruguay’s strong liquidity buffers, high level of gross reserves, and flexible exchange rate regime would help weather shocks.

### Executive Board assessment and key policy recommendations
- Assessment highlights:
  - Uruguay is managing regional recessions relatively well; growth started to recover in Q3 2016.
  - The current account deficit has been cut in half since 2014; international reserves stabilized well above prudential norms.
  - Real effective exchange rate appears aligned with fundamentals and desirable policy settings.
- Main policy advice:
  - Implement the 2017 fiscal consolidation package while supporting recovery and infrastructure investment.
  - Allow automatic fiscal stabilizers to operate along the structural consolidation path.
  - Maintain tight monetary conditions to support disinflation; reduce wage indexation and inflation inertia.
  - Promote de-dollarization via lower inflation and deeper local-currency capital markets.
  - Preserve exchange rate flexibility to absorb external shocks.
  - Pursue structural reforms in education and trade liberalization to boost potential growth.

*Source: URUGUAY STAFF REPORT FOR THE 2016 ARTICLE IV CONSULTATION (IMF staff report).*

### 3.      After weakening further against the U.S. dollar in nominal terms in early 2016, the

### 3.      After weakening further against the U.S. dollar in nominal terms in early 2016, the

### Exchange rate dynamics and REER
- Following a 23 percent depreciation in 2015, the peso depreciated by 8 percent against the U.S. dollar between January and March 2016.
- From May onwards, the currency reversed course, resulting in a 6 percent appreciation in the year through October.
- The real effective exchange rate (REER) depreciated 4.5 percent over the course of 2015, but appreciated by 6 percent through September 2016.
- Staff estimates based on the current account model of the EBA indicate that the REER remains in line with fundamentals and desirable policy settings (Annex 1).
- After the U.S. elections in November, nominal depreciation pressures reemerged, and Uruguay’s EMBI spread widened, though spreads remained relatively compressed compared to regional peers.

### Current account, reserves, and external financing
- The current account deficit is expected to remain around 2¼ percent of GDP in 2016.
- The deficit in 2015 was revised down from 3.5 percent of GDP to 2.3 percent, with a lower income balance matched by lower FDI and other financial inflows.
- In July, the government reopened its dollar-denominated bonds maturing in 2027 and 2050, raising U.S.$1.15 billion at spreads of +205bp and +275bp respectively.
- As of end-November, gross international reserves had fallen by U.S.$1.8 billion during the year-to-date but remained well above prudential norms.
- The central bank intervened in the FX market to support the peso during sharp depreciation episodes in early 2016, and purchased foreign exchange starting in August amid appreciation pressures.
- In September, the central bank also stopped its policy of offering the repayment of maturing government securities in U.S. dollars.

### Inflation and monetary policy
- Inflation rose to a high of 11 percent (y-o-y) in May 2016, above the 3–7 percent target range.
- Headline inflation fell to 8.1 percent (y-o-y) in November 2016.
- One-off increases in administered prices (notably electricity and landline telephone services) and a spike in fruit and vegetable prices, and higher tobacco prices, drove much of the recent inflation spike.
- Administered prices comprise 23 percent of the CPI basket.
- Items at least partly quoted in dollars make up 13 percent of the CPI basket.
- Recent estimates of overall pass-through for Uruguay have been below 10 percent, but for items quoted in U.S. dollars pass-through is fast and around 30 percent.
- The central bank tightened reserve requirements in April 2016 and lowered its reference range for narrow money (M1+) growth; this range was lowered again in July to 1–3 percent.
- Short term (one month) interest rates fluctuated between 11 and 13 percent after peaking at 15 percent in April.
- In April, reserve requirements were raised and equalized for peso and dollar deposits at 28 percent.

### Credit, financial sector structure, and vulnerabilities
- Credit is around 30 percent of GDP.
- Real credit growth to corporates and households has come to a virtual halt since 2015.
- Real value of new SME loans contracted by 14 percent in the 12 months to June 2016, relative to a fall of 4 percent for larger corporates.
- Deposit and credit dollarization are structurally high at 80 and 56 percent, respectively.
- Banks keep excess dollars in reserve deposits at the central bank or in high quality assets abroad.
- Large protective features of the system include: high share of equity in foreign financing (41 percent), gross international reserves of the central bank (29 percent of GDP), liquid FX assets covering 2.5 times non-resident deposits, and long average maturity of NFPS debt (14 years).
- Pockets of vulnerability:
  - NFPS and the public sector have a (small) net short foreign currency position.
  - Around 30 percent of dollar lending goes to non-tradable sectors; some corporate borrowers have net long FX positions.
  - Households have a large net long FX position due to a preference for saving in dollars.
- Non-performing loans increased to 3.5 percent of total loans in 2016 (from 1.3 percent in 2011), though provisions for loan losses remain high.
- Regulatory capital rose to 12.9 percent of risk-weighted assets in 2016.
- Liquidity ratio was 56.3 in 2016.
- Deposits/Loans ratio in national currency was 0.7 in 2016; in foreign currency it was 2.5 in 2016.

### Fiscal stance and labor negotiations
- Fiscal policy remained broadly neutral during 2016 after the structural primary balance improved by 0.6 percent of GDP in 2015.
- The public sector deficit is projected to worsen by 0.2 percentage points to 3.8 percent of GDP in 2016.
- Authorities reaffirmed the objective to reach a 2.5 percent deficit by 2019, as announced in the five-year budget.
- Parliament approved tax increases and expenditure cuts for 2017, implying a 1 percent of GDP fiscal adjustment.
- As of end-November 2016, negotiations for 57 percent of multi-year wage contracts were completed, with 78 percent of these following the government’s guidelines. Contracts now stipulate nominal base wage increases that vary with sectoral growth rather than inflation.

### Outlook and risks
- GDP growth is projected at 1.4 percent of GDP in 2017, recovering as Brazil and Argentina emerge from recession.
- Growth is projected to recover to a potential rate of 3 percent over the medium term.
- Inflation is expected to slow and remain well below 9 percent in 2017, tapering to about 6 percent in the medium term.
- The current account deficit is expected to remain at around 2¼ percent of GDP in 2017, before edging up to 2½ percent in the medium-term.
- Financial stability risks appear limited; stress tests indicate the banking system could withstand a large exchange rate shock.
- Main risks:
  - External: slower-than-expected recovery in Argentina and Brazil; weaker growth in China; tightening in global financial conditions; potential withdrawal of non-resident holders of public debt (almost 58 percent share in 2015).
  - Domestic: a weaker-than-expected 2017 recovery could make planned fiscal consolidation pro-cyclical; a more expansionary fiscal stance could pose debt risks.
- Upside: a potential large foreign investment (about 7 percent of GDP) in a third pulp mill.

### Policy implications and recommended responses
- Use the flexible exchange rate as an automatic shock absorber.
- Allow automatic fiscal stabilizers to operate; avoid pro-cyclical policies.
- Maintain fiscal consolidation trajectory toward a 2.5 percent deficit by 2019 while monitoring growth risks.
- Use liquidity buffers if necessary to smooth shocks.
- In certain circumstances, consider capital flow measures (CFMs) to manage risks from large and volatile capital flows, ensuring they do not substitute for warranted macroeconomic adjustment.
- Step up structural reforms to bolster medium-term growth prospects.

*INTERNATIONAL MONETARY FUND*

### 15.      While the authorities avoided an overly contractionary policy stance in 2016, the room

### cr1728 - 15.      While the authorities avoided an overly contractionary policy stance in 2016, the room

### Macroeconomic stance and near-term outlook
- Authorities avoided an overly contractionary policy stance in 2016, but room for countercyclical policies is limited.
- The fiscal package to reduce the general government’s deficit in 2017 is, by itself, projected to be procyclical, as output remains below potential.
- Delaying structural fiscal consolidation could undercut the downward trajectory of net debt, jeopardize credibility with international investors, and potentially force an even more pro-cyclical tightening later.
- Given the weak economy and announced fiscal plans, the current monetary policy stance seems appropriate; however, with inflation still well above the upper-end of the target range, authorities should stand ready to further tighten monetary stance in 2017 as needed.

*Key numerical points*
- Target fiscal deficit: lower the fiscal deficit to 2½ percent of GDP by 2019.
- Primary surplus projection: staff projects the primary surplus to exceed 0.5 percent of GDP in 2019.
- Public investment adjustment: public investment was lowered by 0.9 percent of GDP in 2015.

### A. Implementing Fiscal Consolidation — findings and risks
- The announced structural consolidation aims to reduce the overall deficit to 2.5 percent of GDP by 2019 and would put net debt on a downward trajectory.
- Fiscal adjustment magnitude to stabilize and trim public debt relative to GDP appears realistic, and preserving fiscal credibility would allow fiscal stabilizers to operate.
- Uruguay’s inclusion of the central bank in public accounts implies a higher level of recorded public debt and higher financing needs (this presentation is unusual globally).
- Debt profile risks: shares of foreign-currency denominated debt and debt held by non-residents exceed standard benchmarks for debt profile risk indicators.
- Population aging fiscal pressure on pensions:
  - Annual deficit of the defined-benefit pillar (excluding special regimes) projected to grow from around 0.7 percent of GDP in 2015 to more than 2 percent in 2050.
  - Further reforms needed, including limiting deficits of special pension regimes and addressing indexation mismatch risks in the public insurance company’s balance sheet.
- Public enterprises: improvements in management and profitability are essential to strengthen the fiscal balance.
  - Recent recapitalization of ANCAP strengthened liquidity; government contracted a hedge to limit financial risk from a large oil price increase.
  - Staff advised allowing retail fuel prices to fully adjust with international oil prices as soon as feasible, ideally based on a transparent formula, and consider implementing after current oil price hedges expire.
- PPPs and infrastructure:
  - PPPs are only slowly taking off despite infrastructure needs.
  - Creation of a U.S.$ 350 million fund for infrastructure projects is a promising step.
  - Budget indicates between a fourth and a third of road and railroad projects for 2015–19 are to be financed through PPPs.
  - PPPs can alleviate initial budget costs but require effective monitoring, oversight, and control of explicit and contingent liabilities.
- Debt management:
  - Prudent debt management lengthened maturities, smoothed redemption profile, and reduced interest cost via dollar issuances and an interest rate swap into Japanese Yen with the World Bank.
  - Share of foreign-currency denominated debt increased again since 2013.
  - Recommendation: foster development of a more liquid and accessible local-currency bond market and establish benchmarks for long-term peso debt instruments.
- Fiscal rule and anchors:
  - Current rule limits the annual increase in net debt but has accommodated a strong net debt rise in recent years; escape clauses were invoked in five of the past eight years.
  - Recommendation: consider adding an overall debt limit to the rule and make annual limits on debt increases adjust to the economic cycle to permit fiscal stabilizers to operate.
- Authorities’ view: confirmed determination to lower the fiscal deficit to 2½ percent of GDP by 2019 and expected the 2017 fiscal package to be sufficient, partially due to targeting tax increases at higher incomes and planned infrastructure investment expansion (including PPPs).

### B. Making Monetary Policy More Effective in Curbing Inflation — outlook and policy recommendations
- Inflation outlook:
  - New wage agreements are nominally set and include nominal wage increases that are lower for each subsequent year, offering an opportunity to reduce inflation persistence.
  - Current projections foresee inflation moving into the 3–7 percent target range by 2019.
- De-dollarization and monetary transmission:
  - Confronting inflation is a precondition for de-dollarization, which would support monetary policy transmission.
  - Policies that internalize dollarization risks, develop local-currency capital markets, and de-dollarize deposits would contribute to lower credit dollarization.
- Monetary stance and framework:
  - The 2013 change to an operational reference range for M1+ growth and progressive reduction in the reference range led to higher interest rates and tighter monetary conditions.
  - Monetary conditions remained generally tight in 2016, aided by exchange rate appreciation. Short-term interest rates edged lower in Q3 and are below levels implied by a calibrated Taylor rule and below estimates of the neutral interest rate (see Box 3).
  - Given weak recovery and procyclical fiscal tightening in 2017, the monetary stance remains sufficiently supportive of disinflation; nonetheless, authorities should be ready to tighten further in 2017 if demand pressures pick up.
- Neutral real interest rate (NRIR) estimates (Box 3):
  - Model-based NRIR estimates range from 4 to 5½ percent.
  - Specific method estimates (in percent): Common stochastic trend 4.1; Standard Taylor rule 5.4; Augmented Taylor rule with stable exchange rate target 5.0; Augmented Taylor with money target 5.7.
  - Estimates exceed actual interest rates, reflecting inflation persistence; results are model-dependent and sensitive to short-term rate movements.
- Scope for enhancing effectiveness (staff recommendations):
  - Reduce inflation persistence further: eliminate indexation provisions in wage agreements as expeditiously as possible (new wage agreements typically include backward indexation after 12 months or more).
  - Strengthen the policy framework:
    - Monitor money demand closely given volatility and the role of deposit dollarization; M1+ growth undershot the reference range in eight out of the thirteen quarters of implementation.
    - Explore options to reduce short-term interest rate volatility (e.g., use standing facilities to create an interest rate corridor), which could stabilize the short-term yield curve, strengthen the policy signal, and support development of peso debt instruments and derivatives.
- Exchange rate policy:
  - The flexible exchange rate should remain the key mechanism to absorb external shocks.
  - Exchange rate movements since early 2015 helped cushion the downturn and support competitiveness.
  - Interventions should be parsimonious to counter disorderly market conditions, not trends driven by fundamentals.
- Authorities’ perspective:
  - Emphasized monetary policy had been kept tight and inflation declined significantly since mid-2016.
  - Noted real interest rates remained strongly positive across the yield curve.
  - Attributed monetary tightening in early 2016 to response to higher inflation and investor shift into U.S. dollars; recently accommodated the reversal in demand for pesos.
  - Saw exchange rate evolution as main driver of inflation and expected moderate real wage increases plus partial abandonment of wage indexation to support inflation decline.

### C. Promoting Financial Development and Maintaining Stability — selected points from text
- De-dollarization is a priority to improve monetary transmission and reduce vulnerabilities; government financial market initiatives can support this process.
- Continued focus on developing local-currency markets, monitoring public enterprise risks, and strengthening fiscal anchors are critical to maintaining financial stability and supporting growth.

*IMF staff report — country chapter on Uruguay (excerpt).*

### 30.      The ongoing steadfast implementation of the 2014 Financial Inclusion Law promises to

### cr1728 - 30.      The ongoing steadfast implementation of the 2014 Financial Inclusion Law promises to

### Financial inclusion, peso funding, and credit market development
- The 2014 Financial Inclusion Law requires employees to choose and designate a bank account on which their wage is paid, whereas that choice was previously made by the employer.
- Private banks can take advantage of the generalization of payroll deposit accounts and financial incentives (lower VAT) for using electronic means of payment to increase their funding in peso.
- Increased peso funding could support the development of the peso credit market and offer new income opportunities for banks, while increased competition with the dominant public bank would lead to greater efficiency.
- Creation of new saving vehicles in peso would need to be accompanied by strong investor protection and efforts to improve financial education.

### De-dollarization, market deepening, and regulatory measures
- Market deepening and prudential policies to discourage foreign currency deposits and loans could support de-dollarization.
- Financing of public infrastructure projects could be designed to foster the development of new capital market instruments in peso, for example by marketing part of the securities issues by dedicated investments funds or trusts to retail investors.
- Regulatory measures suggested:
  - Reinstating differentiated reserve requirements on peso and foreign-currency deposits.
  - Introducing asymmetric liquidity requirements between peso and foreign currency liabilities.
- Such differentiated reserve requirements would not be intended as a capital flow management measure, but a structural tool to limit dollarization and enhance financial stability.

### Supervision, accounting, and prudential frameworks
- Supervision should remain alert to closely monitor banks’ exposures and contain stability risks.
- Implementation of the new International Financial Reporting Standards (IFRS) in 2017 will facilitate monitoring of banks’ exposures.
- Implementation of Basel III will strengthen system resilience, for instance through the imposition of capital surcharges to the five domestic systemically important banks.

### Social policy, inequality, and inclusive growth
- Social policies and transfers have played a significant role in reducing poverty and inequality.
- Uruguay recorded the largest drop in the Gini coefficient between 2009 and 2014 in the Latin America region.
- Further redistributive policies may be constrained by their fiscal costs and should be designed with careful consideration for their potential impact on labor supply and incentives to seek training and enter the labor market.
- The declining trend in the skill premium, especially between high and medium skilled workers, might reduce incentives toward human capital development.

### Education, labor participation, and gender gap
- Education reform is essential to sustain strong and inclusive growth; despite a higher teacher-to-student ratio, education outcomes are only marginally better than regional averages.
- Education reform objectives: improve PISA scores and reduce the high dependence of student performance on socioeconomic conditions.
- Female labor force participation is around 55 percent in Uruguay.
- Female participation has remained about 17 percentage points below male participation.
- Policies to raise female participation include increasing the supply of affordable public child care and extending paternity leave.

### Trade integration and competitiveness
- Uruguay’s export markets have diversified: the share destined for Mercosur fell from 55 percent in 1998 to 21 percent by 2015.
- Recent trade agreement with Chile and the conclusion of trade negotiations between Mercosur and the European Union should benefit Uruguay’s exports.
- Further trade and financial integration can facilitate financing of infrastructure projects and inward investment.
- Creation of a national system of competitiveness and reforms to promote an innovation-friendly business environment, announced in 2015, could support reform efforts.

### Staff appraisal, macro outlook, and policy recommendations
- Uruguay managed the deep recession in its large neighbors relatively well; growth started to recover in Q3 2016 after a marked slowdown.
- The current account deficit has been cut in half since 2014, and international reserves have stabilized well above prudential norms.
- The authorities have locked in tax increases for 2017 and committed to bring the fiscal deficit to 2.5 percent of GDP by 2019, projected to put debt on a downward trajectory.
- Recommendations and observations:
  - Automatic fiscal stabilizers should be allowed to operate along the structural consolidation path.
  - Protect the announced infrastructure investment increase; public investment significantly decreased in 2015 and public-private partnerships are taking off slowly.
  - Further improvements in profitability of public enterprises and efforts to contain current public spending can create room for capital spending.
  - Lower inflation is a prerequisite for reducing dollarization; commitment to low inflation supported by regulatory incentives (e.g., differentiated reserve requirements by currency) and initiatives to deepen local currency capital markets can encourage gradual de-dollarization.
  - A tight monetary policy will be needed to help guide inflation toward the target range; inflation has continuously surpassed the central bank’s target range for the past 6 years, temporarily exceeding single digit levels in mid-2016.
  - Reduce inflation persistence through the wage-setting process; ongoing move to wage increases stipulated in nominal terms is helpful and further steps toward the full elimination of backward inflation indexation are recommended.
  - Structural reforms in education and trade liberalization would deepen social gains and boost potential growth.

*IMF staff report excerpt.*

### 47.      Staff proposes that Uruguay remains on the 12-month Article IV consultation cycle.

### 47.      Staff proposes that Uruguay remains on the 12-month Article IV consultation cycle.

### Real sector and inflation
- Real GDP growth:
  - 2015: 1.0
  - 2016: 1.2
  - 2017 (projection): 1.4
  - 2018 (projection): 2.6
  - 2019 (projection): 3.4
- Unemployment (end of period):
  - 2015: 7.4 percent
  - 2016: 7.4 percent
  - 2017 (projection): 7.9 percent
- Output gap (percent of potential output):
  - 2015: 0.8
  - 2016: -0.6
  - 2017 (projection): -1.7
- CPI inflation:
  - Average 2016: 9.7 percent
  - End of period 2016: 8.5 percent
  - 2017 (projection, average): 7.9 percent
  - Inflation remains "well above the target range, although it has declined recently."
- Core inflation: charted and noted that "core inflation dropping below headline for the first time since February 2014."

### External accounts and reserves
- Current account balance:
  - 2015: -2.3 percent of GDP
  - 2016: -2.2 percent of GDP
  - 2017–2021 projections: around -2.3 to -2.5 percent of GDP
  - Narrative: "The current account is projected to improve in 2016 as lower imports more than offset declining exports."
- Goods exports and imports (US$ millions):
  - Exports f.o.b. 2016: 8,544
  - Imports f.o.b. 2016: 8,897
- Gross international reserves:
  - 2015: 15,637 (US$ millions)
  - 2016: 13,637 (US$ millions)
  - 2017 (projection): 14,057 (US$ millions)
- Reserve adequacy:
  - Reserves are above prudential norms; months of imports of goods and services:
    - 2015: 15.7
    - 2016: 14.1
- External debt and external indicators:
  - Total external debt + non-resident deposits, 2016: 53.9 percent of GDP
  - External public debt, 2016: 35.1 percent of GDP
  - Gross external debt (percent of GDP): 2016: 53.9

### Monetary policy and financial conditions
- Monetary policy stance:
  - The one-month interest rate "was in line with the one implied by a calibrated Taylor rule in 2015."
  - Monetary conditions have "slightly eased in 2016."
- Monetary aggregates (selected):
  - Base money change 2016 (percent change end-year): 7.2
  - Broader M1 (M1 plus savings deposits) 2016: 5.6 (percent change)
  - M2 2016: 9.0 (percent change)
- Interest rates and transmission:
  - Transmission from the short-end of the yield curve to lending rates is limited; "the large spread between deposit and lending rates in the peso market persists."
- Banking system:
  - Credit to private sector (percent of GDP):
    - 2015: 30.1
  - Bank assets (percent of GDP):
    - 2015: 72.3
  - Non-performing loans have increased "albeit from very low levels."
  - Regulatory capital to risk-weighted assets ratio has stabilized after years of decline.
  - Share of FX loans to nontradable sector stands around one-third of total loans.

### Fiscal developments and public debt
- Public sector fiscal balances (percent of GDP):
  - Primary balance:
    - 2015: 0.0
    - 2016: -0.4
    - 2017 (projection): -0.3
  - Overall balance:
    - 2015: -3.6
    - 2016: -3.8
    - 2017 (projection): -3.4
- Public sector revenues and spending (percent of GDP):
  - Revenue 2016: 29.2 percent of GDP
  - Non-interest expenditure 2016: 29.4 percent of GDP
  - Wage bill 2016: 5.1 percent of GDP
- Public sector debt:
  - Gross public sector debt:
    - 2015: 64.3 percent of GDP
    - 2016: 61.1 percent of GDP
    - 2017 (projection): 63.5 percent of GDP
  - Net public sector debt (gross debt minus liquid financial assets):
    - 2016: 42.6 percent of GDP
    - 2017 (projection): 44.4 percent of GDP
  - Composition of debt:
    - Large share of debt is foreign currency denominated; maturity distribution shows a material portion beyond 5 years.
- Fiscal narrative highlights:
  - "The authorities avoided an overly contractionary fiscal policy in 2016..."
  - "Capital expenditures bore the bulk of the adjustment in 2015..."
  - Gross debt increased in 2015 mostly because of the depreciation of the peso.
- Central government operations (selected, percent of GDP):
  - Revenue 2015: 30.3
  - Expense 2015: 31.8
  - Net lending (borrowing) 2015: -2.7

### Credit, banking sector performance, and financial stability
- Credit dynamics:
  - Real credit growth to households (percent change in real UY$):
    - 2015: 6.3
  - Growth of credit to firms (in US$), 2015: 2.8 (percent)
  - Credit growth to both firms and households "has nearly halted" by 2016.
- Profitability and soundness:
  - Return on assets: low and "overall bank profitability remains very low."
  - Non-performing loans (NPLs) increased but from low levels.
- External funding and current account financing:
  - "The current account deficit remains mostly FDI-financed."

### Structural indicators and public spending composition
- Public spending (2015, percent of GDP):
  - Goods and services, Compensation of employees, Interest bill, Other current spending, Social spending, Capital spending—Uruguay’s composition is shown relative to LA6 and EMs benchmarks.
- Infrastructure and education metrics:
  - Infrastructure quality indicators placed Uruguay relative to LA6, EMs, and OECD peers (indices shown).
  - Education outcomes (PISA) and teacher-student ratios are displayed; Uruguay’s teacher-student ratio and PISA scores compared to LAC, EMs, and OECD.

### Key projections and medium-term framework (selected)
- Real GDP growth (percent):
  - 2016: 1.2
  - 2017: 1.4
  - 2018: 2.6
  - 2019: 3.4
  - 2020: 3.3
  - 2021: 3.1
- CPI inflation (average):
  - 2016: 9.7 percent
  - 2017 (projection): 7.9 percent
  - 2018 (projection): 7.6 percent
- Current account (percent of GDP):
  - 2016: -2.2 percent
  - 2017–2021 projections: around -2.3 to -2.5 percent
- Public sector gross debt:
  - 2016: 61.1 percent of GDP
  - 2017 (projection): 63.5 percent of GDP
  - 2018 (projection): 64.7 percent of GDP
- Gross international reserves (US$ billions):
  - 2016: 13.6
  - 2017 (projection): 14.1
  - 2018 (projection): 15.0

*Source: IMF staff report on Uruguay (selected figures and charts as presented).*

### Annex I. Uruguay—External Stability Assessment

### Annex I. Uruguay—External Stability Assessment

### Current account and trade
- The current account deficit (CAD) improved by 2 percentage points of GDP, to 2.3 percent, in 2015.
- In 2016, the CAD is estimated to have remained at about 2.2 percent of GDP.
- Staff projects the CAD will remain at about 2.3 percent of GDP in 2017.
- Drivers cited:
  - Slowing domestic demand and low oil prices reduced the import bill.
  - The Montes del Plata pulp mill launched its first full year of production, supporting exports.
  - Regional slowdown (Argentina and Brazil) weighed on exports.
  - A record summer tourist season from Argentinians visiting Uruguay increased net tourism receipts by ¾ percent of GDP in the first quarter of 2016.
- Merchandise trade (in percent of GDP, 4 quarters through 2016Q2):
  - Trade balance: -4.6 (2012), -2.4 (2013), -1.6 (2014), -0.5 (2015), 0.5 (2016)
  - Exports: 19.3, 17.8, 18.1, 17.0, 16.8
  - Imports: 23.9, 20.2, 19.7, 17.5, 16.3
  - Fuel: 7.2, 3.5, 2.6, 1.6, 1.2
  - Non-fuel: 16.8, 16.7, 17.1, 15.8, 15.1
  - Capital: 3.0, 3.4, 3.7, 3.4, 3.1
  - Consumption: 5.2, 4.9, 5.1, 5.0, 5.0
  - Intermediary: 8.6, 8.4, 8.2, 7.4, 7.0

### Capital flows, FDI, and portfolio flows
- FDI inflows have slowed since 2014, but continued to fully finance Uruguay’s CAD in 2015.
  - Inflows of 2.4 percent of GDP in 2015 were sufficient to fully finance the CAD.
  - In the first half of 2016, despite slowing relative to 2015, FDI inflows were eight times the amount of the CAD.
- Portfolio investment and other financial flows:
  - Portfolio and other financial flows turned negative in 2015 and through mid-2016.
  - Portfolio investment flows recorded a fifth consecutive quarter of net outflows in Q2 2016, with net outflows of US$ 2.9 billion in the first half of 2016.
  - Trend reversed in the second half of 2016 with the Uruguayan Treasury’s issuance of a US$ 1.2 billion global bond and significant portfolio capital inflows.

### Exchange rate and reserves
- Peso movements:
  - Depreciated by 23 percent against the U.S. dollar in 2015.
  - Fell another 8 percent in the first three months of 2016.
  - From April 2016 onwards, the peso stabilized and recorded a year-to-date appreciation of 6 percent as of end October.
  - The central bank intervened in the foreign exchange market to buy pesos in early 2016, and thereafter to buy U.S. dollars, aiming to curb excessive volatility.
- Real effective exchange rate (REER) and valuation:
  - The REER appreciated by 6 percent during January–September, 2016.
  - Real appreciation of 12 percent against Argentina and real depreciation of 11 percent against Brazil during the same period.
  - EBA current account model (October 2016) indicated a cyclically-adjusted current account norm of -3.6 percent of GDP versus a -2.1 percent of GDP cyclically-adjusted CAD estimated for 2016, suggesting a 3½ percent undervaluation (with a large unexplained residual).
  - EBA external stability approach suggested a 2.8 percent overvaluation, as a CAD of -1.3 percent of GDP would be required to stabilize Uruguay’s net foreign assets to GDP ratio in the medium term, while staff’s medium-term CAD projection stands at -2½ percent of GDP.
- Gross international reserves and adequacy (as of end-October 2016):
  - Gross reserves had declined by US$ 1.6 billion since the start of 2016 to US$ 13.97 billion.
  - Gross reserves excluding commercial banks’ reserves held at the BCU amount to US$ 7.5 billion.
  - Reserves remain well above the upper bound of the IMF reserve adequacy metric range and other prudential benchmarks.
  - The sum of the foreign assets of the central bank and commercial banks far exceeds the sum of non-resident deposits and short-term external debt, and is sufficient to fully cover foreign currency denominated bank deposits (resident and non-resident) and short-term external debt.
- Reserve-related indicators (In billions of U.S. dollars (October 31, 2016) and ratios reported in the source):
  - 14.0
  - In months of imports (2016): 14.8
  - In percent of: GDP (2016) 1/: 25.2
  - Short-term external (STE) debt (2016): 193.7
  - STE debt and foreign currency deposits (2016): 52.8
  - STE debt and nonresident deposits (2016): 115.9
  - M2 (latest): 203.0
  - M3 (latest): 52.2
  - Memo items:
    - IMF's new reserve adequacy metric range in 6.6 to 9.9 US$, billions (2015 Q4) 2/
    - Banks' gross foreign assets (US$, billions, 2016): 12.3 99.2

### External stability assessment and risks
- External stability risks are assessed as contained:
  - Solid level of reserves and financing of the CAD through relatively stable FDI inflows mitigate risks.
  - Net international investment position worsened since 2007–11 primarily due to an increase in FDI liabilities.
- Quantitative EBA/ES results and deviations (as presented):
  - I. EBA - Current Account Model 2/4/: CA norm: -3.6; CA projection (cyclically-adjusted): -2.1; Difference: 1.5
  - II. External Sustainability (ES) approach 3/4/: 2.8; CAD required to stabilize NFA in the medium-term: -1.3; 2021 CAD projection: -2.5; Difference: -1.2
  - Note: The total contribution of identified policy gaps was -0.1, while the gap between the projected CA and norm was 1.5, yielding an unexplained residual of 1.6.

### Public sector debt—DSA summary
- Institutional coverage and measurement:
  - Uruguay reports debt figures on a consolidated basis for the whole public sector, excluding public commercial banks but including the central bank.
  - This broad coverage yields public gross financing needs and debt ratios higher than DSA benchmarks for higher scrutiny countries.
- Baseline projection:
  - Under the baseline scenario, gross debt of Uruguay’s public sector is projected to stabilize around 64 percent of GDP in 2021.
  - The long average maturity and favorable currency composition, and high level of liquid financial assets (24.8 percent of GDP at end-2015) mitigate short-term financing risks.
  - Assuming that real GDP growth, real interest rates, and other identified debt-creating flows remain at the level projected for 2021, the debt-stabilizing primary balance is estimated at about ½ percent of GDP, below the projected medium term level of the primary balance.
- Public sector debt composition (end-2015):
  - Central government debt: 47 percent of GDP; average maturity exceeds 14 years; share of local currency denominated debt decreased from 52 to 45 percent in 2015.
  - Central bank debt: declined from 17 to 12 percent of GDP in 2015; about 63 percent denominated in local currency.
  - Public enterprises’ debt: 4 percent of GDP.
  - Local governments and other public sector entities: less than one percent of GDP.
  - Overall, close to 46 percent of public sector debt at end-2015 was in local currency, 66 percent of which was in CPI-indexed units.
- Public sector financial assets (end-2015):
  - Total gross financial assets (including international reserves): 38.7 percent of GDP.
  - Central bank financial assets (including foreign reserve assets): close to 34 percent of GDP, with reserves accounting for 32 percent of GDP; about 14 percentage points of GDP in reserves were the counterpart to reserve requirements on foreign currency bank deposits.
  - Financial assets of the non-financial public sector: 4.7 percent of GDP.
  - Access to contingent credit lines from multilateral institutions represented 4.4 percent of GDP in 2015.
- Net debt:
  - Net debt of the public sector (gross debt minus liquid assets) stood at 39.5 percent of GDP at the end of 2015.
  - The stock of liquid assets of the public sector is computed as total gross public sector assets minus the reserves held by banks at the BCU against foreign currency deposits; this stock stood at 24.8 percent of GDP at end-2015.
- Debt dynamics and projections:
  - Low real interest rates imply a negative interest rate/growth differential in 2016, contributing to a decrease in gross public sector debt.
  - Appreciation of the peso vis-à-vis the U.S. dollar in the second-half of 2016 is expected to reduce gross debt.
  - Net debt is projected to increase in 2016 as central bank reserves decrease and banks’ reserves at the BCU remain stable.
  - Both gross and net debts increase again in 2017 and 2018 before stabilizing as the primary balance improves due to fiscal adjustment.
  - Public gross financing needs decrease in 2017 before temporarily rising over the medium term as global interest rates increase and gross debt rises.
- Scenario analysis and uncertainty:
  - The fan charts show limited uncertainty around the baseline; the width of the symmetric fan chart is estimated at around 15 percent of GDP.
  - Alternative “historical” scenario (key macro variables behave as in the last decade) yields a downward-sloping debt path due to prior high growth rates and exchange rate appreciation after the 2002 crisis.
- Vulnerabilities of financing profile:
  - Public sector gross financing needs exceeded the benchmark level of 15 percent of GDP in 2015, reflecting primarily the mostly short-term maturity of central bank debt, which has declined sharply since then.
  - The share of public sector debt held by non-residents and total external financing needs are slightly above benchmarks, but refinancing risks are limited by high liquidity buffers, sizable liquid financial assets, and access to contingent credit lines.
  - The share of short-term debt in total public debt increased by 2.1 percent in 2015 in part due to valuation effects, but the level of short term remains very low.

*Source: IMF staff — Annex I and Annex II, “Uruguay—External Stability Assessment” and “Uruguay—Public Sector Debt Sustainability Analysis” (excerpts).*

### 5.5 percent of GDP.

### cr1728 - 5.5 percent of GDP.

### Stress tests and debt-dynamics findings
- In a stylized downside "combined shock" that combines a permanent 20 percent exchange rate depreciation (relative to the baseline) with a temporary drop in growth and primary balances, and a permanent increase in real interest rates:
  - Gross debt ratio rises by about 18 percentage points over the five-year forecast horizon.
  - Net debt rises by 13 percentage points over the same horizon.
- Sensitivity notes:
  - The sensitivity of net debt to exchange rate shocks is lower than that of gross debt because valuation effects on assets partially offset valuation effects on foreign-currency denominated debt.
- Distributional assessment:
  - Fan charts confirm debt dynamics are generally manageable under statistical distributions of combined shocks.
  - Gross public debt would remain below 72 percent of GDP in 90 percent of the cases under the combined shock scenario.
  - Net public debt would remain below 56 percent of GDP under the combined shock scenario.

### Baseline projections and key fiscal indicators (selected figures)
- Nominal gross public debt (in percent of GDP): 2014: 66.0; 2015: 61.4; 2016: 64.3; 2017: 61.1; 2018: 63.5; 2019: 64.7; 2020: 64.3; 2021: 64.1; 2021 projection (later column): 64.0.
- Net public debt (in percent of GDP): 2014: 38.4; 2015: 35.9; 2016: 39.5; 2017: 42.6; 2018: 44.4; 2019: 45.5; 2020: 44.3; 2021: 44.2; 2021 projection (later column): 44.2.
- Public gross financing needs (in percent of GDP): 2014: 11.2; 2015: 14.7; 2016: 19.6; 2017: 13.9; 2018: 12.3; 2019: 12.1; 2020: 14.0; 2021: 15.4; later column: 15.2.
- Real GDP growth (in percent): 2014: 5.6; 2015: 3.2; 2016: 1.0; 2017: 1.2; 2018: 1.4; 2019: 2.6; 2020: 3.4; 2021: 3.3; later column: 3.1.
- Inflation (GDP deflator, in percent): 2014: 7.1; 2015: 9.4; 2016: 8.7; 2017: 9.5; 2018: 7.5; 2019: 7.2; 2020: 6.7; 2021: 6.3; later column: 6.4.
- Nominal GDP growth (in percent): 2014: 13.0; 2015: 12.9; 2016: 9.8; 2017: 10.8; 2018: 9.0; 2019: 10.0; 2020: 10.4; 2021: 9.8; later column: 9.7.
- Effective interest rate (in percent): 2014: 5.2; 2015: 5.3; 2016: 6.3; 2017: 6.5; 2018: 6.5; 2019: 6.8; 2020: 7.0; 2021: 7.3; later column: 7.6.
- Contribution to change in gross public sector debt (cumulative change): 2014-2021 cumulative change: listed as -0.3 in final projection column.
- Identified debt-creating flows (cumulative over projections): sum shown as -9.4 in final projection column.
- Automatic debt dynamics (cumulative over projections): -10.7 in final projection column.
- Residual (cumulative): 9.1 in final projection column.

### Composition, alternative scenarios, and stress tests (selected assumptions and scenarios)
- Alternative scenarios presented include: Baseline, Historical, Constant Primary Balance.
- Example underlying assumptions (Baseline, percent unless noted):
  - Real GDP growth (2016–2021): 1.2; 1.4; 2.6; 3.4; 3.3; 3.1 (annual sequence).
  - Inflation (2016–2021): 9.5; 7.5; 7.2; 6.7; 6.3; 6.4 (annual sequence).
  - Primary Balance (2016–2021): -0.4; -0.3; 0.3; 0.6; 0.7; 0.8 (annual sequence).
  - Effective interest rate (2016–2021): 6.5; 6.5; 6.8; 7.0; 7.3; 7.6 (annual sequence).
- Stress-test variants include: Primary Balance Shock, Real GDP Growth Shock, Real Interest Rate Shock, Real Exchange Rate Shock, Combined Shock, and Additional Stress Tests.
- Specific stress-test parameter examples (Combined Shock):
  - Real GDP growth path under Combined Shock: 1.2; -0.6; 0.6; 3.4; 3.3; 3.1 (annual sequence).
  - Primary balance under Combined Shock: -0.4; -1.4; -1.6; 0.6; 0.7; 0.8 (annual sequence).
  - Effective interest rate under Combined Shock: 6.5; 7.1; 7.1; 7.7; 8.2; 8.6 (annual sequence).

### Fiscal space indicators and vulnerability metrics
- Output gap (percent of potential GDP): -0.6.
- Growth forecast track record (percentile): 85.0.
- Gross Public Debt (percent of GDP): 61.1.
- Gross financing needs (GFN) (percent of GDP): 13.9.
- Share of public debt in foreign currency: 54.2 (percent of total).
- Share of public debt held by non-residents: 57.6 (percent of total).
- External financing requirements (percent of GDP): 16.4.
- Public Financial Assets (percent of GDP): 35.5.
- Change in share of short-term debt: 2.1.
- Probability of breaching the debt benchmark at end of projection period: presented as a probability indicator (panel shows assessments; text notes the debt would exceed 70 percent of GDP under the combined stress scenario).
- Real public capital stock per capita (2011 PPP$): 13,407.
- Banking sector NPL ratio: 3.5.

### Policy implications and desk assessment highlights
- Bottom-line assessment: "Fiscal space is limited beyond the operation of automatic stabilizers around the structural consolidation path."
- Desk assessment commentary:
  - GDP growth has slowed significantly since 2014; the output gap is negative and expected to reach -0.6 percent of GDP.
  - The government allowed the fiscal deficit to deepen in 2016 while locking in the required adjustment for 2017.
  - Financing risk indicators exceed standard benchmarks; debt would exceed 70 percent of GDP under the combined stress scenario.
  - Risks are mitigated by high liquidity buffers, including sizable liquid financial assets of the public sector and access to contingent credit lines.
  - "The stabilization of the debt at the end of the projection period is contingent upon the full implementation of the planned fiscal adjustment."

*Source: IMF staff, Uruguay Public DSA and Fiscal Space annex (as compiled in the provided content).*

### Annex IV. Uruguay—External Debt Sustainability Analysis

### Annex IV. Uruguay—External Debt Sustainability Analysis

### Overview
- After averaging 46 percent of GDP during 2011–14, Uruguay’s gross external debt rose to 58 percent of GDP in 2015, mostly due to significant depreciation of the nominal exchange rate against the U.S. dollar.
- In 2016, gross external debt is projected to have decreased to 54 percent of GDP, aided by some nominal appreciation of the peso against the U.S. dollar.
- Under staff’s baseline scenario, gross external debt is projected to hold steady over the medium term, rising very slightly to 54¾ percent of GDP in 2021, largely due to exchange rate and price dynamics.
- Gross external financing needs (which averaged 14 percent of GDP from 2011–15) decreased to 9 percent of GDP in 2016, and are expected to moderate further, to 8¼ percent of GDP, in the medium term.

### Baseline projections and key macroeconomic assumptions
- Baseline: External debt (percent of GDP)
  - 2011: 39.4
  - 2012: 45.0
  - 2013: 48.5
  - 2014: 51.5
  - 2015: 58.3
  - 2016: 53.9
  - 2017: 54.5
  - 2018: 54.9
  - 2019: 54.8
  - 2020: 54.5
  - 2021: 54.8
- Change in external debt (percent of GDP)
  - 2011: -11.2
  - 2012: 5.6
  - 2013: 3.5
  - 2014: 2.9
  - 2015: 6.8
  - 2016: -4.4
  - 2017: 0.6
  - 2018: 0.4
  - 2019: -0.2
  - 2020: -0.2
  - 2021: 0.3
- Key macroeconomic assumptions (baseline, selected)
  - Real GDP growth (in percent): Historical 5.2; 2016 1.0; 2017 4.7; 2018 2.0; 2019 1.2; 2020 1.4; 2021 2.6
  - GDP deflator in US dollars (change in percent): Historical 33.7; 2016 -2.1; 2017 6.5; 2018 13.9; 2019 9.0; 2020 1.2; 2021 2.2
  - Nominal external interest rate (in percent): Historical 4.7; 2016 2.9; 2017 1.4; 2018 2.2; 2019 2.7; 2020 1.1; 2021 2.0
  - Growth of exports (US dollar terms, in percent): Historical 20.5; 2015 -11.8; 2016 9.9; 2017 14.9; 2018 -1.6; 2019 8.1; 2020 7.6; 2021 9.4
  - Growth of imports (US dollar terms, in percent): Historical 26.4; 2015 -17.4; 2016 11.8; 2017 22.2; 2018 -2.5; 2019 8.5; 2020 7.8; 2021 9.7
  - Current account balance, excluding interest payments (percent of GDP): Historical -1.0; 2015 -0.9; 2016 -1.9; 2017 2.0; 2018 -1.1; 2019 -0.9; 2020 -1.8; 2021 -1.4
  - Net non-debt creating capital inflows (percent of GDP): Historical 3.2; 2015 6.2; 2016 4.9; 2017 0.6; 2018 2.1; 2019 2.3; 2020 2.3; 2021 2.4

### Identified external debt-creating flows and automatic dynamics
- Identified external debt-creating flows (percent of GDP)
  - 2011: -15.2
  - 2012: -1.6
  - 2013: -5.5
  - 2014: -6.5
  - 2015: -3.3
  - 2016: -0.6
  - 2017: -0.7
  - 2018: -1.3
  - 2019: -1.7
  - 2020: -1.6
  - 2021: -1.4
- Components (percent of GDP)
  - Current account deficit, excluding interest payments
    - 2011: 1.0
    - 2012: 3.5
    - 2013: 3.6
    - 2014: 3.1
    - 2015: 0.9
    - 2016: 1.1
    - 2017: 0.9
    - 2018: 1.8
    - 2019: 1.4
    - 2020: 1.6
    - 2021: 1.7
  - Net non-debt creating capital inflows (negative)
    - 2011: -3.2
    - 2012: -4.3
    - 2013: -4.6
    - 2014: -4.6
    - 2015: -6.2
    - 2016: -2.1
    - 2017: -2.3
    - 2018: -2.3
    - 2019: -2.3
    - 2020: -2.4
    - 2021: -2.4
  - Automatic debt dynamics (percent of GDP)
    - 2011: -12.9
    - 2012: -0.8
    - 2013: -4.5
    - 2014: -5.0
    - 2015: 2.1
    - 2016: 0.5
    - 2017: 0.7
    - 2018: -0.8
    - 2019: -0.7
    - 2020: -0.8
    - 2021: -0.8
- Contributions to automatic dynamics (percent of GDP)
  - From nominal interest rate
    - 2011: 1.7
    - 2012: 1.5
    - 2013: 1.5
    - 2014: 1.4
    - 2015: 1.5
    - 2016: 1.1
    - 2017: 1.4
    - 2018: 0.6
    - 2019: 1.0
    - 2020: 0.9
    - 2021: 0.8
  - From real GDP growth
    - 2011: -1.9
    - 2012: -1.3
    - 2013: -1.8
    - 2014: -1.4
    - 2015: -0.5
    - 2016: -0.6
    - 2017: -0.7
    - 2018: -1.3
    - 2019: -1.8
    - 2020: -1.7
    - 2021: -1.6
  - From price and exchange rate changes
    - 2011: -12.8
    - 2012: -1.0
    - 2013: -4.1
    - 2014: -4.9
    - 2015: 1.1
    - 2016–2021: (projection line indicates contribution from price and exchange rate changes included in residual for projection; table shows dots thereafter)

### Gross external financing needs and external-debt-to-exports
- External debt-to-exports ratio (in percent)
  - 2011: 142.0
  - 2012: 178.8
  - 2013: 194.3
  - 2014: 205.3
  - 2015: 235.6
  - 2016: 248.7
  - 2017: 239.5
  - 2018: 236.3
  - 2019: 228.5
  - 2020: 223.0
  - 2021: 220.3
- Gross external financing need (in billions of US dollars)
  - 2011: 6.0
  - 2012: 6.7
  - 2013: 8.3
  - 2014: 7.9
  - 2015: 7.7
  - 2016: 5.1
  - 2017: 5.4
  - 2018: 4.6
  - 2019: 4.8
  - 2020: 5.3
  - 2021: 5.8
- Gross external financing need (in percent of GDP)
  - 2011: 12.8
  - 2012: 12.5
  - 2013: 15.1
  - 2014: 14.4
  - 2015: 15.8
  - 2016: 9.2
  - 2017: 9.5
  - 2018: 7.7
  - 2019: 7.7
  - 2020: 8.0
  - 2021: 8.2

### Stress tests and bound tests
- Summary of stress-test findings:
  - Standard growth and interest rate shocks would have a minimal impact on external debt.
  - Shocks to the non-interest current account and a combined shock (to the real interest rate, growth and current account) would weigh more on external debt, albeit still moderately.
  - Exchange rate shocks would pose the biggest risk to Uruguay’s external debt sustainability.
- Specific scenario notes from figures:
  - Individual shocks are permanent one-half standard deviation shocks.
  - Historical scenarios use ten-year historical averages to project debt dynamics five years ahead.
  - A combined shock scenario applies permanent 1/4 standard deviation shocks to real interest rate, growth rate, and current account balance.
  - A real depreciation shock scenario includes a one-time real depreciation of 30 percent occurring in 2017.
- Despite vulnerabilities from exchange rate shocks, the report notes that given Uruguay’s sizeable gross international reserves and liquidity buffers, risk to external debt sustainability remains limited.

### Key analytical definitions and methodological notes
- External debt includes non-resident deposits.
- Automatic debt dynamics are derived as [r - g - r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock, with r = nominal effective interest rate on external debt; r = change in domestic GDP deflator in US dollar terms; g = real GDP growth rate; e = nominal appreciation (increase in dollar value of domestic currency); and a = share of domestic-currency denominated debt in total external debt.
- Contribution from price and exchange rate changes is defined as [-r(1+g) + ea(1+r)]/(1+g+r+gr) times previous period debt stock.
- Gross external financing need is defined as current account deficit, plus amortization on medium- and long-term debt, plus short-term debt at end of previous period.
- Debt-stabilizing non-interest current account: long-run, constant balance that stabilizes the debt ratio assuming key variables remain at their levels of the last projection year.

*Source: Annex IV. Uruguay—External Debt Sustainability Analysis (cr1728)*

### 6. Uruguay FCPF REDD Readiness

### 6. Uruguay FCPF REDD Readiness

### Preparation
- Key dates listed:
  - October 27th, 2016
  - April 30th, 2017
  - August 31st, 2017
  - August 31st, 2017
  - TBC
  - TBC

### Relations with the Inter-American Development Bank (As of December 8, 2016)
- The Inter-American Development Bank’s Board of Executive Directors approved in December 2015 the Country Strategy with Uruguay (2016-2020).
- Sovereign-guaranteed lending under the program is expected to reach approximately US$1.8 billion.
- The program includes additional non reimbursable financing for technical assistance and analytical work.
- Approved lending under the previous Country Strategy (2010-2015) reached approximately US$1.9 billion in sovereign guaranteed loans and US$1 billion in non-sovereign guaranteed loans.
- Objectives of the country strategy for 2016–2020:
  - Boost productivity and competitiveness by promoting innovation, improving productive infrastructure, and supporting an integrated and coordinated policy for international positioning.
  - Promote equity and social inclusion by strengthening human capital and employability, supporting health care reform, improving habitat, and supporting early childhood and youth segments of the most vulnerable population groups.
  - Strengthen public sector management by supporting greater efficiency in public institutions and strengthening urban and departmental management.
- As of October 31st 2016, the Bank’s portfolio in execution in Uruguay includes 37 sovereign guaranteed loans for US$2.1 billion:
  - 33 investment loan operations totaling US$1.3 billion.
  - 4 policy-based loans for US$800.8 million with a deferred drawdown option.
- Main sectors comprising the active public sector portfolio:
  - Export and investment promotion: 27%
  - Public management and finance: 16%
  - Water, sanitation, and solid waste: 14%
  - Energy: 14%
  - Urban development and security: 8%
  - Transportation: 7%
  - Science and technology: 2%
  - Agribusiness: 3%
  - Education and job training: 5%
  - Social protection: 4%
- Active private sector portfolio: 22 loans totaling US$449.1 million, primarily concentrated in:
  - Energy: 48%
  - Agribusiness: 46%

### Financial Relations With the Inter-American Development Bank (In millions of U.S. dollars)
- Total outstanding loans: US$1,728 (As of November 30, 2016)
- Loan Transactions (annual figures):
  - Disbursement: 2005: 242.3; 2006: 114.8; 2007: 112.9; 2008: 337.2; 2009: 477.3; 2010: 54.3; 2011: 138.2; 2012: 121.6; 2013: 195.9; 2014: 166.3; 2015: 182.6
  - Amortization: 2005: 220.0; 2006: 519.6; 2007: 133.8; 2008: 140.0; 2009: 162.0; 2010: 465.1; 2011: 115.4; 2012: 120.7; 2013: 591.7; 2014: 99.2; 2015: 110.1
  - Net Loan Flows: 2005: 22.3; 2006: -404.8; 2007: -21.0; 2008: 197.2; 2009: 315.2; 2010: -410.8; 2011: 22.8; 2012: 0.8; 2013: -395.8; 2014: 67.1; 2015: 72.4
- Source: Inter-American Development Bank.
- Note: Only loans with sovereign guarantee are considered.
- Footnote: This includes US$366 million approved under the Reallocation Program and US$50 million from the China Cofinancing Fund.

### Statistical Issues (As of November 15, 2016)
I. Assessment of Data Adequacy for Surveillance
- General: Data provision has some shortcomings, but is broadly adequate for surveillance. Most affected area is national accounts.
- National accounts:
  - 2009 revision updated the benchmark year (from 1983 to 1997 and 2005) and adopted the System of National Accounts (SNA) 1993.
  - Remaining shortcomings: limited coverage of the enterprise survey, partial update of business register, poor quality source data for some components of GDP, inadequate information on the informal economy, and incomplete quarterly accounts.
  - Long-time series are not available on the BCU website.
  - There is no regular schedule for updating the base year of the national accounts.
  - Causes of current revisions to the quarterly national accounts are not explained to users.
  - Need to plan adoption of the 2008 SNA and updating of the base year.
- Prices:
  - New base period for the consumer price index: December 2010 = 100.
  - CPI has national coverage and includes more than forty thousand price quotations.
  - CPI does not cover implicit rent or net acquisitions of owner-occupied dwellings.
  - Reselection of the sample of detailed products for the CPI has not been done for an extended period.
  - Base of the wholesale price index has been updated to 2001.
  - Producer price indices (March 2010 =100) for national products have been recently disseminated.
  - PPI does not cover utilities, construction, business and other services and exported output.
  - For both CPI and PPI, statistical outputs/intermediate results are not validated with available information from alternative sources.
  - CPI and PPI would benefit from a more regular and frequent schedule of weight updates.
- Government finance statistics:
  - Official data on the central administration, the state enterprises and the social security system are complete and current.
  - Problems with the timeliness of the data for local governments.
  - Monthly and quarterly financing and debt data are disseminated on the BCU website from 1999 onwards for the central government and total public sector, but no information is reported for publication in the International Financial Statistics.
  - Information reported for publication in the Government Finance Statistics Yearbook covers revenue and expense for the consolidated central government (data on revenue and expense for local governments have not been reported since 1994), and general government’s operations on financial assets and liabilities, both in flows (financing) and stocks (debt).
- Monetary and financial statistics:
  - Prepared in accordance with the IMF's Monetary and Financial Statistics Manual (2000).
  - Authorities report monetary data for the central bank, other depository corporations, and other financial corporations (OFCs) using the standardized reporting forms (SRFs).
  - Data for OFCs are limited to off-shore financial institutions.
  - A mission could be fielded to expand institutional coverage of OFCs and compile the SRF for OFCs with full institutional coverage.
- Financial sector surveillance:
  - Authorities participate in CDIS, CPIS, and FSI databases.
  - Only annual FSIs data from 2009 through 2013 have been reported; authorities have not responded to requests for more current data.
  - FSIs on nonfinancial corporations, households, market liquidity, and real estate markets are not available.
  - BCU disseminates FSIs for individual banks monthly and generates FSIs for the banking system weighting individual bank FSIs by asset share.
- External sector statistics:
  - Balance of payments and international investment position statistics are compiled and published quarterly.
  - Data compiled following recommendations of the fifth edition of the Balance of Payments Manual.
  - BCU is working on improving quality and coverage of trade in services and direct investment-related statistics, and on migration to the sixth edition of the Balance of Payments and International Investment Position Manual.
  - Uruguay disseminates the international reserves and foreign currency liquidity data template, submits quarterly external debt statistics to QEDS, and participates in CPIS and CDIS.

II. Data Standards and Quality
- Uruguay subscribed to the SDDS in February 2004 and is in observance.
- Data ROSC published on October 1, 2001.
- A data reassessment ROSC on CPI, PPI and NA was published in February 2014.

III. Reporting to STA (Optional)
- Both the consumer and wholesale price indices are reported on a regular and timely basis for publication in the International Financial Statistics (IFS).
- Authorities do not provide trade price and volume indices for publication in the IFS.
- Annual GFS are regularly reported to STA for publication in the Government Finance Statistics Yearbook.
- No high frequency GFS are reported for publication in the International Financial Statistics.
- Uruguay reports to STA balance of payments and IIP data for publication in the IFS and the Balance of Payments Statistics Yearbook.

### Uruguay: Common Indicators Required For Surveillance (As of November 15, 2016)
- Table headers: Date of latest observation; Date received; Frequency of Data; Frequency of Reporting; Frequency of Publication; Memo items: Data Quality – Methological Soundness; Data Quality – Accuracy and Reliability.
- Selected entries:
  - Exchange Rates: Date of latest observation 12/29/15; Date received 12/29/15; Frequency: D; Reporting: D; Publication: D.
  - International Reserve Assets and Reserve Liabilities of the Monetary Authorities: Date of latest observation 02/16; Date received 04/04/16; Frequency: M; Reporting: M; Publication: M.
  - Reserve/Base Money: Date of latest observation 09/16; Date received 10/19/16; Frequency: M; Reporting: M; Publication: M.
  - Broad Money: Date of latest observation 08/16; Date received 10/19/16; Frequency: M; Reporting: M; Publication: M.
  - Central Bank Balance Sheet: Date of latest observation 08/16; Date received 10/19/16; Frequency: M; Reporting: M; Publication: M.
  - Consolidated Balance Sheet of the Banking System: Date of latest observation 08/16; Date received 10/19/16; Frequency: M; Reporting: M; Publication: M.
  - Interest Rates: Date of latest observation 11/24/14; Date received 11/24/14; Frequency: D; Reporting: D; Publication: D.
  - Consumer Price Index: Date of latest observation 09/16; Date received 10/13/16; Frequency: M; Reporting: M; Publication: M; Data Quality – Methodological Soundness: O, LO, O, O; Data Quality – Accuracy and Reliability: LO, O, O, LNO, NO.
  - Revenue, Expenditure, Balance and Composition of Financing – Central Government: Date of latest observation 8/15; Date received 11/30/15; Frequency: M; Reporting: M; Publication: M.
  - Stocks of Central Government and Central Government-Guaranteed Debt: Date of latest observation Q2/15; Date received 9/30/15; Frequency: Q; Reporting: Q; Publication: Q.
  - External Current Account Balance: Date of latest observation Q2/16; Date received 11/15/16; Frequency: Q; Reporting: Q; Publication: Q.
  - Exports and Imports of Goods and Services: Date of latest observation Q2/16; Date received 11/15/16; Frequency: Q; Reporting: Q; Publication: Q.
  - GDP/GNP: Date of latest observation Q4/15; Date received 11/17/16; Frequency: Q; Reporting: Q; Publication: Q; Data Quality – Methodological Soundness: LO, LO, LO, LO; Data Quality – Accuracy and Reliability: LNO, LNO, LO, O, LO.
  - Gross External Debt: Date of latest observation Q2/15; Date received 10/1/15; Frequency: Q; Reporting: Q; Publication: Q.
  - International Investment Position: Date of latest observation Q2/16; Date received 11/15/16; Frequency: Q; Reporting: Q; Publication: Q.
- Footnotes (selected):
  - 1/ Includes reserve assets pledged or otherwise encumbered as well net derivative positions.
  - 2/ Both market-based and officially-determined, including discount rates, money market rates, rates on treasury bills, notes and bonds.
  - 3/ Foreign, domestic bank, and domestic nonbank financing.
  - 4/ The general government consists of the central government (budgetary funds, extra budgetary funds, and social security funds) and state and local governments.
  - 5/ Including currency and maturity composition.
  - 6/ Includes external gross financial asset and liability positions vis-à-vis nonresidents.
  - 7/ Frequency codes: Daily (D); weekly (W); monthly (M); quarterly (Q); annually (A); irregular (I); and not available (NA).
  - 8/ Assessment reflects the reassessment provided in the data ROSC (published in February 2014, based on mission August 20–31, 2012) for the dataset corresponding to the variable in each row. Assessment categories: fully observed (O); largely observed (LO); largely not observed (LNO); not observed (NO); not available (NA).
  - 9/ Same as footnote 9, except referring to international standards concerning (i) source data, (ii) assessment of source data, (iii) statistical techniques, (iv) assessment and validation of intermediate data and statistical outputs, and (v) revision studies.

*International Monetary Fund*

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_Source: https://www.imf.org/-/media/files/publications/cr/2017/cr1728.pdf_