Press Release No. <a name="P16_75"></a>03/57

Mr. Horst Köhler, the Managing Director of the International Monetary Fund (IMF), addressed the following letter about Uruguay to Members of the Financial Community on April 10, 2003:

"The Uruguayan authorities' economic program for 2003 contains continued macroeconomic adjustment and structural reforms that set the conditions for a sustained recovery of growth and a viable external position. A key element of the program is the authorities' commitment to raise the primary fiscal surplus to 3.2 percent of GDP in 2003, and further to 4 percent of GDP over the medium term, to assure sustainable debt dynamics. The authorities are also pressing ahead with restructuring the banking system and are putting in place other structural reforms to enhance the productive potential of the economy. Their economic program is being supported by exceptionally large use of Fund resources as well as assistance from the World Bank and the Inter American Development Bank.

"In addition to continued support from international financial institutions, the success of the authorities' program will depend on the participation of Uruguay's private creditors. The authorities have announced a comprehensive debt exchange offer that aims at two key objectives: (i) to provide sufficient cash flow relief in order to eliminate any residual financing needs over the next few years; and (ii) to achieve a sustainable debt and debt service profile over the medium term. Achieving these objectives is a condition for completion of the next (third) review under Uruguay's stand-by arrangement. A successful debt exchange requires high participation to allow the program to go forward and the forthcoming review to be completed.

"The Uruguayan authorities are aware of the substantial challenges ahead, and have reaffirmed their determination to address the economic imbalances and deepen structural reforms in order to put the economy on a path of sustained growth and financial stability. I believe that their program represents a strong and balanced effort to achieve these goals. The support of the financial community, including institutional and retail investors from the private sector, is essential to the success of this program."

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