## Uruguay: Selected Issues

_IMF Staff Country Reports, May 23, 2023_

## Source details

**Canonical URL:** [Uruguay: Selected Issues](https://www.imf.org/en/publications/cr/issues/2023/05/23/uruguay-selected-issues-533686)

## Other formats

- [Markdown version](/en/publications/cr/issues/2023/05/23/uruguay-selected-issues-533686/index.md)
- [Structured JSON version](/en/publications/cr/issues/2023/05/23/uruguay-selected-issues-533686/index.json)
- [Bundle manifest](/en/publications/cr/issues/2023/05/23/uruguay-selected-issues-533686/bundle-manifest.json)

## Bibliographic details
- Published: May 23, 2023
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400244346.002

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### Fiscal outlook and risks
- The paper explores fiscal consolidation measures that could generate the savings needed to lower debt.
- Authorities’ policies, together with a favorable macroeconomic environment, have led to a decline of the public debt-to-gross domestic product ratio to pre-pandemic levels.
- Short-term risks are low, and debt is sustainable, yet a sequence of unfavorable shocks such as a prolonged increase in international interest rates and a growth slowdown could lead to further increases in debt.
- The associated primary balances that would be needed to reach a certain debt level would depend on the assumed transition time.

### Analysis of revenue and spending structure
- Recent initiatives to focus value-added tax (VAT) exemptions and to reduce rates to recipients of social programs are steps in the right direction to reduce tax expenditures and the regressivity of the tax.
- An analysis of the structure of revenues and spending suggests possible measures to reduce the fiscal deficit.
- A reduction of energy subsidies and a full implementation of targeted VAT would increase the efficiency of spending and lead to non-negligible savings.

### Key findings and implications
- Fiscal consolidation is feasible through targeted measures on tax expenditures and subsidies.
- The timing (transition time) of consolidation matters for the primary balance path required to achieve debt targets.
- Policy actions that both increase efficiency and reduce regressivity (targeted VAT, narrowing VAT exemptions) are highlighted as priorities.

### Policy recommendations (implicit from analysis)
- Focus VAT exemptions to limit tax expenditures.
- Reduce VAT rates for recipients of social programs rather than broad-based exemptions.
- Implement targeted VAT fully.
- Reduce energy subsidies to improve spending efficiency and generate savings.

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## Content in this bundle

- **Uruguay: Selected Issues; IMF Country Report No. 23/179; April 26, 2023**
  - [Uruguay: Selected Issues; IMF Country Report No. 23/179; April 26, 2023 (Markdown version)](/-/media/files/publications/cr/2023/english/1uryea2023002.pdf.md){rel="alternate" type="text/markdown"}
  - [Uruguay: Selected Issues; IMF Country Report No. 23/179; April 26, 2023 (PDF)](/-/media/files/publications/cr/2023/english/1uryea2023002.pdf){rel="external" type="application/pdf"}

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_Source: https://www.imf.org/en/publications/cr/issues/2023/05/23/uruguay-selected-issues-533686_