The executive board of International Monetary Fund (FMI) approved the review of Uruguay by article IV (which corresponds to each member country of the organization whether or not it has a current program). There he highlighted the “resilience” of the Uruguayan economy“solid market access” for debt and “the commendable decision” of the government to maintain fiscal objectives despite lower economic growthamong others. In turn, recommended “additional efforts” to achieve a primary surplus (before debt payment) towards 2029.
This approval was given after a technical staff from the organization visited Uruguay (and submitted a report) between September 14 and 25.
The meetings held by the IMF technical staff in Montevideo
Photo: Estefanía Leal/El País.
The IMF technical staff was in Montevideo between September 14 and 25, 2026, headed by the head of mission for Uruguay, Raphael Espinoza. The team met with the Minister of Economy and Finance, Gabriel Oddone; the president of the Central Bank, William Tolosa; the Minister of Labor and Social Security, Juan Castillo; the Minister of Education and Culture, José Carlos Mahiá; the Minister of the Environment, Edgardo Ortuño; the director of the Office of Planning and Budget, Rodrigo Arim; “as well as with other senior government officials and representatives of the private sector,” according to the agency’s statement.
The board’s statement recalled that “a growth is expected (of the Uruguayan economy) of 1.3% by 2026, reflecting the impact of the drought, and a projection of 2.4% by 2027 as the output gap narrows, driven by private consumption and investment.
In turn, “it is expected that tax deficits of 2026 and 2027 remain in line with the objectives of the five-year budget, initiating a consolidation process that will reach a cumulative total of 1.5% of the Gross Domestic Product (GDP) by 2029″ and “it is expected that the inflation remains around the 4.5 objective,” he added.
For the IMF executive board, “although growth of 1.3% is projected for 2026—due to the drought impact of the previous year in agricultural production—the rest of the economy grows around its potential level, driven mainly by private consumption, given that lower inflation has favored real wages. “Despite the slowdown, the 2025 fiscal targets were met and are expected to be achieved in 2026 as well.”
The organization highlighted that “the country continues to demonstrate resilience, supported by strong institutions and credible policy frameworks. The direct macroeconomic effects of oil price shock and greater uncertainty around global trade policy have been limited, thanks in part to the high proportion of renewable energy in Uruguay and favorable export prices.”
“Uruguay continues to benefit from strong market accesswith sovereign debt yield spreads that remain the lowest in the region and are close to their historical lows,” he added.
For the IMF board, “the five-year budget and the 2026 budget update (Accountability) aim to reduce the fiscal deficit by increasing revenues, as well as stabilizing public debt in the medium term.”
He also praised that “In a context of negative output gap, the authorities’ decision to maintain budgetary objectives is commendable in the medium term.”
Photo: Leonardo Mainé/El País.
However, the organization’s board of directors recommended that “make additional efforts to bring the primary balance of the central government and the Social Security Bank (CG-BPS) to 0.5% of GDP by 2029 “It would help put the debt-to-GDP ratio on a downward trajectory and generate buffers that could be used should global financial conditions tighten or if a serious crisis required fiscal intervention.”
In this regard, the organization’s technical staff evaluated where the measures could go to achieve it. “Among the options are the reduction of tax expenses (this is tax exemptions), the moderation of the wage bill and the improving the efficiency of public spending“, as well as “Conduct spending reviews in high-spending areas, such as health and educationwould help identify those expenses that, over time, have lost productivity,” the staff report indicated.
“Looking ahead, Uruguay could consider strengthening results-based budgeting, which would include more closely linking program objectives and performance indicators to the budget process,” he added.
Fiscal framework, debt and the shocks that the Central Bank managed to overcome
The IMF board highlighted that “the recent reforms of the fiscal framework are a positive step. Their effective implementation, as well as efforts to improve fiscal transparency, will strengthen credibility and promote debt sustainability.”
Regarding this last point, he noted that “solid debt management, which includes progressive de-dollarization, is mitigating refinancing, interest rate and exchange rate risks.”
“Uruguay is a pioneer in climate finance, which has allowed it to expand its investor base and obtain innovative financing from multilateral institutions,” he added.
The organization’s board also highlighted that the Banco Central (BCU) “has achieved overcome various shocks through a rapid and appropriate responseHe also suggested “continuing efforts to de-dollarize the financial sector and develop capital markets” because this “will contribute to achieving low and stable inflation, in addition to promoting growth.”
Meanwhile, the IMF technical mission recommended strengthening the “de jure” independence and financial autonomy of the BCU since it would “consolidate the progress made in the monetary framework.”
He highlighted that “the appointment of the first president of the BCU without political affiliation (William Tolosa) constitutes a step forward in the ‘de facto’ independence of the institution.”
Ignacio Sánchez, El País.
“To align the BCU’s ‘de jure’ independence with that of other countries in the region, the appointment of board members should follow international best practices, including establishing fixed-term terms that do not coincide with the electoral cycle,” he suggested.
The “main policy challenge” for Uruguay, according to the IMF
The Fund’s board noted that while “macroeconomic stability is preserved, The main policy challenge for Uruguay is to boost its potential growth”.
“The government is promoting a reform agenda focused on supply, in order to increase productivity and accelerate convergence towards the income levels of advanced economies. The Competitiveness bill and the initiative “Uruguay Innovates” “They should improve the business climate, encourage investment and support innovation,” the IMF estimated.
“In addition, deepen reforms in public companies —including better aligning wages with productivity and setting cost-reflective rates—would help reduce production costs and strengthen competitiveness,” he suggested.
For the IMF board, “expanding the labor supply and strengthening human capital is also essential to sustain growth in the face of demographic pressures.”
“Efforts should focus on reducing gender gaps in labor force participation, attracting skilled workers, and better aligning education and training with labor market needs,” he recommended.
Source: www.elpais.com.uy
