{ "title": "Uruguay: Staff Concluding Statement of the 2025 Article IV Mission", "publication": "IMF News, September 19, 2025", "sourceUrl": "https://www.imf.org/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission", "canonical": "https://www.imf.org/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission", "overlayPath": "/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/index.md", "summary": "An International Monetary Fund (IMF) mission, led by Mr. Raphael Espinoza, visited Montevideo during September 8-19 for the 2025 Article IV consultation. At the end of the visit, the mission issued the following statement:", "publishDate": "2025-09-19", "sections": [ { "heading": "Mission overview and context", "content": "- Mission leader: Mr. Raphael Espinoza; visit: September 8-19, 2025.\n- Key recent developments:\n - Agriculture: Following a severe drought in 2023, agricultural production expanded significantly in 2024, sustaining growth around potential and contributing to narrowing the current account deficit to -1 percent of GDP.\n - Exchange rates and tourism: Substantial real appreciation of the Argentinian’s currency in 2024 contributed to improving the external position and fueled inbound tourism in early 2025.\n - Labor market: With the output gap closing, the unemployment rate ticked down, and real wages are growing in line with productivity.\n - Fiscal: The fiscal deficit of the central government including social security (CG-BPS) increased in 2024 to 3.2 percent of GDP, necessitating activation of the fiscal rule’s escape clause.\n - Reserves: International reserves are ample and reached a level equivalent to 11½ months of imports at end-August 2025.\n - Inflation and monetary policy: Inflation fell to 4.2 percent in August 2025, below the BCU target, after the BCU raised its policy rate three times in response to a peso depreciation at end-2024 and later cut rates in July and August 2025 as inflation declined.\n - External and market access: Uruguay maintains favorable access to financial markets, supported by investment-grade credit ratings and sovereign spreads that are currently at historic lows and are the lowest in the region.\n - Political context: A new administration took over in March 2025 with an agenda balancing inclusive growth and macroeconomic stability; new government guidelines for the regular round of wage negotiations were issued in July 2025." }, { "heading": "Outlook and risks", "content": "- Growth projections:\n - 2025: 2.5 percent\n - 2026: 2.4 percent\n- Inflation outlook:\n - Projected to consolidate around the target of 4.5 percent, enabling gradual easing of monetary policy conditional on domestic context and inflation expectations.\n- Current account:\n - Expected to widen slightly to 1.7 percent of GDP in the medium term.\n- Risk assessment:\n - Downside risks: international trade policy and commodity price shocks, regional uncertainty, climate shocks.\n - Mitigants: ample liquidity buffers, long debt maturities, favorable borrowing conditions, increasing share of domestic debt issuances.\n - Financial system risks: contained due to low credit-to-GDP ratio, liquid and well-capitalized banks, ample FX reserves and a limited sovereign-banking nexus.\n - Upside risks: strong agricultural harvests, favorable commodity prices, new trade agreements, access to new markets and investments, stronger-than-expected structural reform effects." }, { "heading": "Stability and growth policies", "content": "Fiscal policy — findings and recommendations\n- Near-term dynamics:\n - CG-BPS deficit projected to increase to 4.1 percent of GDP in 2025 (3.7 including cuarentones), 0.9 percentage points above the 2024 deficit.\n - Increase attributed mainly to postponed expenditures from 2024, advance tax payments, and recent spending commitments.\n - Fiscal stance described as mildly pro-cyclical in 2025 amid a nearly closed output gap.\n- Medium-term plan and projections:\n - Proposed five-year budget aims to reduce the deficit and stabilize debt below the new prudential debt anchor.\n - Structural primary balance pathway: improve from -1.5 percent of GDP in 2025 and 2026 to 0.1 percent of GDP in 2029.\n - Net debt: stabilize below the prudential debt anchor at around 63 percent of GDP, up from 58 percent of GDP in 2024.\n- Risks to the plan:\n - Macroeconomic and international tax environment, implementation delays, and spending pressures.\n- Recommended further actions:\n - Raise the CG-BPS primary balance progressively to around ½ percent of GDP by 2029.\n - Policy options include reducing tax incentives, moderating the wage bill, and improving the efficiency of spending.\n- Fiscal framework reform:\n - Support for proposed enhancements: binding fiscal rule targets anchored to a prudential net debt/GDP ratio, corrective mechanisms for slippages, greater autonomy and expanded mandate for the Fiscal Council.\n - Importance of adequate operationalization and meeting fiscal rule targets to secure reputational benefits.\n - Ongoing social dialogue expected to yield social protection/social security proposals by April 2026; ensure proposals are consistent with sustainability of social spending.\n\n Monetary policy — findings and recommendations\n- Institutional development:\n - Appointment of the first BCU president without political affiliation noted as advancing de facto central bank independence.\n- Strategy and stance:\n - Commitment to bring inflation to the target of 4.5 percent underpinned by contractionary monetary policy, enhanced central bank communication, and support from budget and collective bargaining guidelines.\n - Monetary policy stance described as appropriately contractionary; real interest rate is above the real neutral rate given lower inflation expectations.\n - Recent declines in the policy rate justified by declining inflation and inflation expectations.\n- Communication and framework:\n - Continue emphasizing that the inflation target is 4.5 percent with a tolerance range to anchor expectations.\n - Exchange rate: should continue serving as a shock absorber; FX interventions limited to disorderly market conditions.\n- De-dollarization and independence:\n - BCU began revamping its de-dollarization strategy; first legislative proposal focuses on increasing competition in the deposit market in local currency.\n - To align de jure independence with regional peers, Board appointments should follow best international practices, including fixed terms not overlapping with the electoral cycle.\n\n Financial sector — findings and recommendations\n- System soundness:\n - Banking system: well capitalized, highly liquid and profitable.\n - Capital ratios: almost twice the minimum regulatory requirement.\n - Private credit: 31 percent of GDP, although it has increased by 10 percent of GDP since 2010.\n - Housing-related financial stability risks: low.\n- Risks and mitigants:\n - Dollarization heightens FX credit and liquidity risks, mitigated by low household indebtedness, moderate and mostly hedged corporate debt, and ample FX reserves.\n- Regulatory and supervisory agenda:\n - Authorities committed to strengthening regulation and supervision; regulation of digital asset services providers has improved and the regulatory perimeter has expanded.\n - Superintendency of Financial Services (SSF) should continue implementing its roadmap to strengthen the risk-based supervisory framework.\n - Planned initiatives aim at improving data management and reporting within financial supervision.\n - Macroprudential Policy Committee should be leveraged to strengthen the macroprudential framework.\n - New National Strategy for Combating Money Laundering and ongoing regulatory efforts expected to enhance the AML/CFT framework’s effectiveness and alignment with FATF standards.\n- Financial development and policy recommendations:\n - Greater access to credit in local currency and de-dollarization would support growth and contribute to macroeconomic stability.\n - Improve access to credit for creditworthy firms—particularly SMEs—while maintaining prudent lending standards and regulatory reforms to foster a level playing field.\n\n Structural policies — findings and recommendations\n- Growth potential and reform priorities:\n - Structural reforms are key to boosting economic potential after a period of slow growth.\n - Identified gaps: infrastructure, trade facilitation, entry barriers and regulatory bottlenecks, market concentration, human capital, and access to credit.\n - Government measures announced: cut red tape, open new export markets, modernize institutions and fiscal incentives for investment, export promotion, and innovation; allocate more resources to human capital, attract foreign talent, and tackle insecurity.\n- Specific recommendations:\n - Intensify reforms: simplify business creation, licensing and taxation; enhance competition policy; improve education quality and reduce school dropouts.\n - Reform incentive frameworks in SOEs to better align wages with productivity; ensure efficient allocation of resources and cost-reflective pricing in SOEs.\n - Develop financial mechanisms for climate change adaptation.\n- Technology and labor market:\n - Uruguay gaining regional recognition in innovation and Artificial Intelligence (AI); recommended actions include closing digital gaps and promoting equitable and ethical AI integration into education and industry.\n - Support programs for workers at risk from AI disruption.\n- Labor market challenges and policy directions:\n - Challenges: limited flexibility, high youth unemployment, and an aging population.\n - While institutions have contributed to stability and relatively low inequality, firms perceive hiring and wage-setting practices as restrictive.\n - Recommendations: introduce measures to account for firm heterogeneity in hiring and wage-setting, monitor employment effects of new wage agreements for the young and low-skilled, encourage labor force participation, and facilitate integration of migrants." }, { "heading": "Closing", "content": "- The IMF team thanked the Uruguayan authorities for their hospitality and collaboration during the Article IV mission to Montevideo between September 8-19, 2025.\n\nIMF staff concluding statement, September 19, 2025.\n\n---\n\n\n References\n\n- Uruguay and the IMF\n- IMF Policy Advice -- A Factsheet\n- Mission Concluding Statements\n- PRESS CENTER\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission" } ], "bullets": [ "[Markdown version](/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/index.md)", "[Structured JSON version](/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/index.json)", "[Bundle manifest](/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/bundle-manifest.json)", "Published: September 19, 2025", "Mission leader: Mr. Raphael Espinoza; visit: September 8-19, 2025.", "Key recent developments:", "Growth projections:", "Inflation outlook:", "Current account:", "Risk assessment:", "Near-term dynamics:", "Medium-term plan and projections:", "Risks to the plan:", "Recommended further actions:", "Fiscal framework reform:", "Institutional development:", "Strategy and stance:", "Communication and framework:", "De-dollarization and independence:", "System soundness:", "Risks and mitigants:", "Regulatory and supervisory agenda:", "Financial development and policy recommendations:", "Growth potential and reform priorities:", "Specific recommendations:", "Technology and labor market:", "Labor market challenges and policy directions:", "The IMF team thanked the Uruguayan authorities for their hospitality and collaboration during the Article IV mission to Montevideo between September 8-19, 2025.", "[Uruguay and the IMF](http://www.imf.org/external/country/URY/index.htm)", "[IMF Policy Advice -- A Factsheet](https://www.imf.org/en/about/factsheets/imf-surveillance)", "[Mission Concluding Statements](https://www.imf.org/en/news/searchnews)", "[PRESS CENTER](http://presscenter.imf.org/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/index.md", "json": "/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/index.json", "bundleManifest": "/en/news/articles/2025/09/19/cs-091925-uruguay-staff-concluding-statement-of-the-2025-article-iv-mission/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:07:58.174Z" }