IMF Staff Concludes Visit to Uruguay

June 6, 2022

End-of-Mission press releases include statements of IMF staff teams that convey preliminary findings after a visit to a country. The views expressed in this statement are those of the IMF staff and do not necessarily represent the views of the IMF’s Executive Board. This mission will not result in a Board discussion.
  • The economic recovery continues at a firm pace, despite a volatile external environment, supported by high agricultural commodity prices, recovering service sectors and strong investment.
  • Inflationary pressures, driven both by external and domestic factors, are expected to dissipate only gradually.
  • Amid a well-advanced recovery, conditions are appropriate for further fiscal consolidation efforts while supporting the most vulnerable to mitigate the impact of the food and energy price shock. Additional monetary tightening is needed to bring inflation within the target range.

Washington, DC: An International Monetary Fund (IMF) mission led by Gustavo Adler visited Montevideo, Uruguay during May 30-June 3, 2022, to discuss with the Uruguayan authorities recent economic developments, including the recovery from the pandemic, the impact of the war in Ukraine, and the country’s policy priorities. At the conclusion of the visit, Mr. Adler issued the following statement:

The recovery from the pandemic continues on a strong footing. After growing 4.4 percent in 2021, Uruguay’s GDP reached pre-pandemic levels in late 2021 and is poised to continue growing at a firm pace in 2022 on the back of strong meat and grain exports and recovering service sectors. While the war in Ukraine has exacerbated global uncertainty, its impact on the Uruguayan economy is expected to be limited as direct trade with Russia and Ukraine is low, and the drag on the Uruguayan economy from high oil prices is expected to be more than offset by the expansionary effects of high agricultural commodity prices. However, potential disruptions in global fertilizers’ markets and a marked deceleration of global growth—amid high energy costs, tightening global financial conditions and COVID-related dislocations—are key short-term risks to Uruguay’s growth.

Inflation has drifted further away from the target range in recent months, driven both by external inflationary pressures related to the global food and energy shock and domestic factors. With price pressures broadening beyond food and energy items, and inflation expectations remaining above the target range, inflation is expected to exceed the central bank’s target range for some time.

Following the gradual withdrawal of monetary policy stimulus since mid-2021, the latest interest rate hikes have turned monetary policy moderately contractionary. Further monetary tightening will be key to re-anchor inflation expectations, continue strengthening central bank credibility and durably reining in inflation over the monetary policy horizon.

The authorities’ intentions to continue with prudent fiscal policy to rebuild buffers that would allow to address future shocks, along well-targeted temporary measures to mitigate the impact of the inflationary shock and the pandemic on the most vulnerable, are welcome. Progress made in recent months on the fiscal framework, including the implementation of the Fiscal Council, is commendable.

The authorities’ intention to reform the pension system and pursue improvements in education are welcome, as these changes are key to boost medium-term growth, safeguard fiscal sustainability and ensure inter-generational equity and social cohesion.

The IMF mission thanks the authorities for their kind hospitality and fruitful discussions and looks forward to further interactions in the context of the upcoming Article IV annual consultation, planned for late 2022.

IMF Communications Department

PRESS OFFICER: Maria Candia Romano

Phone: +1 202 623-7100Email: