Press Release No. 14/76

Press Release: Statement by IMF Deputy Managing Director Naoyuki Shinohara at the Conclusion of his Visit to Uruguay

February 28, 2014

Mr. Naoyuki Shinohara, Deputy Managing Director of the International Monetary Fund (IMF), made the following statement today in Montevideo:

“It is a great pleasure to be in Uruguay for my first visit to this country renowned for its progressive society and strong democratic institutions. I had the privilege to meet Vice President Danilo Astori, and had a very productive meeting with Finance Minister Mario Bergara and Central Bank President Alberto Graña. I also had the opportunity to meet several members of Parliament, and representatives of private sector and civil society. I would like to thank the Uruguayan authorities for their warm welcome.

“Uruguay’s performance has been remarkable over the last decade. Today’s high per capita income and impressive social indicators attest to Uruguay’s success in fostering strong and inclusive economic growth. This was achieved through prudent macroeconomic policies, forward-looking institutional reforms and active social policies. The authorities’ prudent macro–economic management contributed greatly to Uruguay’s resilience to the global financial crisis of 2008-2009.

“The outlook for the Uruguayan economy is solid. The external environment, however, poses risks. Weaker growth in neighboring countries could continue weighing on economic activity in Uruguay. However, the overall impact should be lower than the spillovers experienced in the past, as Uruguay has significantly diversified its trade and reduced its debt vulnerabilities over the last decade.

“If the outlook does weaken, the exchange rate should act as the main shock absorber. Ample international reserve buffers that were prudently built by the policymakers could be used to smooth any excess volatility. In addition, automatic fiscal stabilizers would help buffer temporary negative shocks.

“Reducing inflation to the target range remains a key economic policy priority for Uruguay. We welcome the recent monetary tightening. A tighter fiscal policy stance could also help monetary policy in taming inflation and preserving competitiveness.

“Overall, Uruguay is well placed to maintain vigorous growth. Further structural reforms to boost infrastructure and raise the efficiency of labor markets would enhance Uruguay’s competitiveness, strengthen the resilience of the economy, and sustain high productivity and investment growth, which would lead to a more prosperous economy to the benefit of Uruguay’s citizens.”