{ "title": "Uruguay: Staff Concluding Statement of the 2026 Article IV Mission", "publication": "IMF News, September 24, 2026", "sourceUrl": "https://www.imf.org/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission", "canonical": "https://www.imf.org/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission", "overlayPath": "/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/index.md", "summary": "An International Monetary Fund (IMF) mission, led by Mr. Raphael Espinoza, visited Montevideo during September 14-24 for the 2026 Article IV consultation. At the end of the visit, the mission issued the following statement.", "publishDate": "2026-09-24", "sections": [ { "heading": "Recent Developments", "content": "- Mission visit: Montevideo during September 14-24 for the 2026 Article IV consultation; mission led by Mr. Raphael Espinoza.\n- Growth and output:\n - Growth moderated; averaged 1.8 percent in 2025 due to a local drought affecting agricultural production since Q3:2025.\n - Growth supported by strong private consumption driven by real wage gains amid declining inflation and peso appreciation.\n- External sector and reserves:\n - Current account deficit was 0.5 percent of GDP in 2025.\n - Goods trade balance deteriorated in H1:2026.\n - International reserves: 11¼ months of imports at end-August 2026.\n- Labor market and prices:\n - Unemployment at historically low levels and a decrease in informality.\n - Inflation declined steadily throughout 2025 and fell below the 4.5 percent inflation target of the BCU; inflation was 4.6 percent in August (year not specified in source).\n - Central bank initiated a monetary easing cycle in July 2025.\n - Inflation expectations remained well anchored around the target.\n- Fiscal position and market access:\n - Deficit of the central government including social security (CG-BPS) was 3.7 percent of GDP in 2025 (4.1 percent of GDP excluding one-off pension revenues), up from 3.1 percent in 2024.\n - Uruguay retains favorable market access, investment-grade credit ratings, and sovereign spreads that are the lowest in the region and near historical lows.\n- Policy orientation:\n - Government in its second year emphasizes macroeconomic stability and inclusive growth.\n - Updated 2026 budget preserves fiscal consolidation objectives of the five-year budget and advances reforms to boost growth, jobs, and reduce poverty." }, { "heading": "Outlook and Risks", "content": "- Growth projections:\n - 2026 growth projected at 1.3 percent due to the effect of last year’s drought on agricultural production.\n - Growth projected to reach 2.4 percent in 2027 as the output gap narrows.\n- Inflation and policy rate:\n - Inflation projected to stabilize at the 4½ percent target at end-2026 and in 2027.\n - Accompanied by a gradual increase of the policy rate to a neutral level.\n- Current account:\n - Projected current account deficit: 0.9 percent of GDP in 2026.\n- Risk assessment:\n - Macroeconomic risks tilted to the downside.\n - Downside risks: tighter global financial conditions, oil price shocks, weather-related shocks including El Niño.\n - Mitigating factors: high share of renewable electricity production; ample liquidity buffers and favorable borrowing conditions; systemic risks contained due to low credit-to-GDP ratio, liquid and well-capitalized banks, and limited sovereign-banking nexus.\n - Upside risks: high agricultural revenues, opportunities from the EU-Mercosur agreement, and strong effects of reforms." }, { "heading": "Macroeconomic policies — Overview", "content": "- Policy mix should focus on:\n - (i) preserving structural fiscal consolidation objectives;\n - (ii) maintaining a reactive monetary policy to continue anchoring inflation expectations; and\n - (iii) implementing reforms to strengthen policy transmission channels and to boost potential growth." }, { "heading": "Fiscal Policy", "content": "- Fiscal outturns and projections:\n - With fiscal outturns through July 2026 broadly in line with plans, the deficit of the CG-BPS is projected at 4.1 percent of GDP (unchanged from the 2025 deficit when excluding one-off pension revenues).\n - In the context of a negative output gap of 1½ percent of GDP in 2026, authorities’ decision to maintain medium-term budget objectives is commended.\n - Planned adjustment expected to improve the primary balance of the CG–BPS from -1.6 percent of GDP in 2026 to -0.1 percent of GDP in 2029.\n- Measures underpinning adjustment:\n - Strengthen tax administration.\n - Implementation of the global minimum tax.\n - Rationalization of tax expenditures.\n - IFIs technical assistance supports these measures; publishing detailed information on estimation of their yields would improve credibility.\n- Debt dynamics and risks:\n - Under the baseline, the NFPS debt-to-GDP ratio projected to remain broadly stable in the medium term.\n - Risks to adjustment: macroeconomic and international tax environment, implementation delays, and spending pressures.\n - Further effort to bring CG-BPS primary balance to ½ percent of GDP by 2029 would help put debt-to-GDP on a steady downward path.\n- Policy options and recommendations:\n - Reduce tax expenditures.\n - Moderate the wage bill.\n - Improve public spending efficiency.\n - Undertake spending reviews in large outlay areas such as health and education and strengthen use of performance information in budget decision-making.\n- Fiscal framework and debt management:\n - Recent fiscal framework reforms welcome; operationalization of correction mechanism (decree published in June 2026) will strengthen credibility and debt sustainability.\n - Strong debt management, including progressive de-dollarization, mitigates rollover, interest rate, and exchange rate risks.\n - Uruguay pioneering in climate finance, widening investor base and securing innovative multilateral financing.\n - BPS’s actuarial analysis: proposed early retirement reform would have negligible effects on sustainability; proposed change in Solidarity Supplement indexation would reduce fiscal risks.\n - Authorities have a roadmap to improve fiscal transparency, supported by IMF technical assistance." }, { "heading": "Monetary Policy", "content": "- Assessment of policy conduct:\n - Monetary policy has been appropriately reactive and predictable and has anchored inflation expectations.\n - Monetary stance has been suitably accommodative so far.\n - Central bank should maintain reactive decision-making and be ready to adjust the policy rate as it monitors inflation-relevant factors.\n- Institutional and operational recommendations:\n - Strengthen de jure central bank independence and BCU financial autonomy.\n - BCU Board members should be appointed for fixed terms not overlapping with the electoral cycle to align with international best practices.\n - Reviews of the IT framework and the inflation target should be regular, pre-announced, well-communicated, periodic but infrequent, analytically rigorous, and highly transparent; changes only when structural developments justify them and with a high threshold for change.\n- Exchange rate and FX policy:\n - Exchange rate should continue to act as a shock absorber; FX interventions limited to disorderly market conditions.\n- De-dollarization and financial deepening:\n - Ongoing efforts to reduce financial dollarization, stimulate credit in pesos, and deepen domestic capital markets are welcome.\n - BCU measures: lowering peso reserve requirements, reducing remuneration of dollar reserve requirements, and enhancing competition in peso markets.\n - Low and stable inflation remains the most important driver of de-dollarization.\n - De-dollarization may help reduce the size of the BCU balance sheet and lower its quasi-fiscal cost over time.\n - New investment vehicles, fintech regulatory sandboxes, and Open Finance will contribute to financial market development." }, { "heading": "Financial Sector", "content": "- Banking system soundness:\n - Banks are well capitalized, highly liquid, and profitable.\n - Capital ratios are almost twice the minimum regulatory requirement.\n - Credit in pesos is growing at about 9 percent in real terms y/y (August 2026).\n - Non-performing loans remain low with adequate loan loss provisions.\n - Profitability declined in 2025 mainly due to a weaker dollar.\n- Dollarization and risk mitigation:\n - Dollarization heightens FX credit and liquidity risks, but mitigants include low household indebtedness, mostly hedged and liquid corporates, and ample banks and central bank FX liquidity.\n- Regulatory and supervisory developments:\n - Expansion of the BCU regulatory perimeter and regulation of virtual asset service providers to contribute to financial stability and integrity.\n - Implementation of Basel III through revised capital requirements, including differentiated treatment of FX lending, and a new Pillar 2 supervisory framework.\n - Enhanced lender-of-last-resort framework to bolster crisis-management capacity.\n - Amendments to the AML/CFT framework to strengthen Uruguay’s AML/CFT regime." }, { "heading": "Structural Issues", "content": "- Growth performance and goal:\n - Since 2016, growth has averaged 1.2 percent, insufficient to converge to advanced economies’ income levels.\n - Government advancing an agenda of inclusive growth, building on reform momentum.\n- Labor market and human capital:\n - Strengthen labor supply and labor market inclusion to support growth amid demographic pressures.\n - Integral Employment Law and Uruguay Impulsa are steps to improve employment prospects for vulnerable groups, addressing weak educational outcomes and high hiring costs with training and targeted subsidies.\n - Additional measures: close the gender gap in labor force participation, attract skilled workers, and recognize qualifications.\n - Coordinated efforts and additional budget to combat crime to enhance labor market participation and business climate.\n- Collective bargaining and productivity:\n - 2025-26 government guidelines for collective bargaining boosted lower-paid workers’ salaries while being consistent with the inflation target and reducing indexation.\n - Authorities should monitor employment outcomes and consider accounting for productivity differences across firms.\n- Competitiveness, SOEs, and investment:\n - Draft Competitiveness Law aims to facilitate trade, strengthen competition, reduce red tape, and attract investment; incentives to R&D and Uruguay Innova agency are welcome.\n - Continued reforms in state-owned enterprises and state-owned banks recommended: align wages with productivity, improve resource allocation, and cost-reflective pricing.\n - Government’s irrigation agenda could expand agricultural production and boost climate resilience.\n- Education:\n - Secondary education lags advanced-economy benchmarks in completion rates and mathematics performance.\n - Updated budget provides additional resources, expands scholarships and support for disadvantaged households.\n - Ongoing curriculum reforms emphasize competency-based learning and alignment with labor market needs; Ceibal’s AI literacy framework should further strengthen skills development.\n\nStaff thanks the Uruguayan authorities for their hospitality, constructive dialogue, and collaboration during the Article IV mission to Montevideo.\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/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission" } ], "bullets": [ "[Markdown version](/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/index.md)", "[Structured JSON version](/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/index.json)", "[Bundle manifest](/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/bundle-manifest.json)", "Published: September 24, 2026", "Mission visit: Montevideo during September 14-24 for the 2026 Article IV consultation; mission led by Mr. Raphael Espinoza.", "Growth and output:", "External sector and reserves:", "Labor market and prices:", "Fiscal position and market access:", "Policy orientation:", "Growth projections:", "Inflation and policy rate:", "Current account:", "Risk assessment:", "Policy mix should focus on:", "Fiscal outturns and projections:", "Measures underpinning adjustment:", "Debt dynamics and risks:", "Policy options and recommendations:", "Fiscal framework and debt management:", "Assessment of policy conduct:", "Institutional and operational recommendations:", "Exchange rate and FX policy:", "De-dollarization and financial deepening:", "Banking system soundness:", "Dollarization and risk mitigation:", "Regulatory and supervisory developments:", "Growth performance and goal:", "Labor market and human capital:", "Collective bargaining and productivity:", "Competitiveness, SOEs, and investment:", "Education:", "[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/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/index.md", "json": "/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/index.json", "bundleManifest": "/en/news/articles/2026/09/24/cs-092426-uruguay-staff-concluding-statement-2026-aiv-mission/bundle-manifest.json" }, "generatedAtUtc": "2026-09-26T04:53:31.978Z" }