Uruguay: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Uruguay

IMF Staff Country Reports, May 23, 2023

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Canonical URL: Uruguay: 2023 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Uruguay

Uruguay showed strong resilience during the coronavirus disease 2019 pandemic, owing to its high institutional quality, strong governance, and the authorities’ policy responses.
Scarring effects in real activity and the labor market were mitigated somewhat by the authorities’ well-targeted responses.
The authorities’ strong record of accomplishment of implementing sound macroeconomic policies in a challenging environment has improved the country’s resilience to shocks.

The economy is expected to decelerate in 2023.
Despite external headwinds, tighter financial conditions, and the impact of the drought, growth would be supported by:
- a strong tourism season,
- increased cellulose production and exports,
- robust private consumption as real wages recover.

Fiscal policy plans are appropriate for 2023.
After the effect of the drought abates, additional fiscal efforts would be needed to:
- put debt on a firm downward path,
- rebuild policy space.

The tight monetary policy stance is appropriate.
Recommendation: maintain the tight stance until inflation and inflation expectations have converged to the target range in a sustained manner.

Subject: External debt, Financial services, Fiscal policy, Fiscal stance, Inflation, International organization, Monetary policy, Prices, Public debt
Keywords: Caribbean, Fiscal stance, Global, government finance statistics yearbook, Inflation, inflation expectation, policy credibility, Policy issue, step-down interest rate structure