## IMF Staff Concludes Visit to Uruguay

_IMF News, June 6, 2022_

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## Bibliographic details
- Published: June 6, 2022

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### Mission overview
- IMF mission led by Gustavo Adler visited Montevideo, Uruguay during May 30-June 3, 2022.
- End-of-Mission press release: Press Release No. 22/182.
- The mission will not result in a Board discussion.
- Press officer: Maria Candia Romano; Phone: +1 202 623-7100; Email: MEDIA@IMF.org.
- The views expressed are those of IMF staff and do not necessarily represent the views of the IMF’s Executive Board.
- The IMF mission looks forward to further interactions in the context of the upcoming Article IV annual consultation, planned for late 2022.

### Economic recovery and growth
- Key findings:
  - The economic recovery continues at a firm pace, supported by high agricultural commodity prices, recovering service sectors and strong investment.
  - After growing 4.4 percent in 2021, Uruguay’s GDP reached pre-pandemic levels in late 2021.
  - GDP is poised to continue growing at a firm pace in 2022 on the back of strong meat and grain exports and recovering service sectors.
- External impact assessment:
  - Direct trade with Russia and Ukraine is low; the war in Ukraine’s direct impact on Uruguay is expected to be limited.
  - The drag from high oil prices is expected to be more than offset by expansionary effects of high agricultural commodity prices.
- Short-term risks to growth:
  - Potential disruptions in global fertilizers’ markets.
  - Marked deceleration of global growth amid high energy costs, tightening global financial conditions and COVID-related dislocations.

### Inflation and monetary policy
- Key findings:
  - Inflation has drifted further away from the target range in recent months, driven by external inflationary pressures related to the global food and energy shock and domestic factors.
  - Price pressures are broadening beyond food and energy items.
  - Inflation expectations remain above the target range.
  - Inflation is expected to exceed the central bank’s target range for some time.
- Policy recommendations:
  - Additional monetary tightening is needed to bring inflation within the target range.
  - 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.
- Recent stance:
  - Following the gradual withdrawal of monetary policy stimulus since mid-2021, the latest interest rate hikes have turned monetary policy moderately contractionary.

### Fiscal policy, reforms, and social measures
- Key findings:
  - 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.
  - The authorities intend to continue with prudent fiscal policy to rebuild buffers that would allow addressing future shocks.
  - Progress made on the fiscal framework, including the implementation of the Fiscal Council, is commendable.
- Policy recommendations and priorities:
  - Continue prudent fiscal consolidation while maintaining well-targeted temporary measures to mitigate the impact of the inflationary shock and the pandemic on the most vulnerable.
  - Reform the pension system and pursue improvements in education to boost medium-term growth, safeguard fiscal sustainability and ensure inter-generational equity and social cohesion.

### Closing remarks
- The IMF mission thanked the authorities for their hospitality and fruitful discussions.

*IMF Staff Concludes Visit to Uruguay — Press Release No. 22/182 (June 6, 2022).*

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## References

- [Uruguay and the IMF](http://www.imf.org/external/country/URY/index.htm)
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- [PRESS CENTER](http://presscenter.imf.org/)
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_Source: https://www.imf.org/en/news/articles/2022/06/06/pr22182-imf-staff-concludes-visit-to-uruguay_