The Executive Board of the International Monetary
Fund (IMF) completed today the sixth review under the SDR 1.99
billion (US$3.02 billion) Stand-By Arrangement for Uruguay.
Completion of the review makes SDR 139.8 million (about
US$212.3 million) immediately available to Uruguay. In
completing the review, the Board granted waivers for the
nonobservance of three structural performance criteria and
waivers of applicability of two quantitative performance
criteria for which data were not available.
The Stand-By Arrangement was approved on March 25, 2002 in
an amount equivalent to SDR 594.1 million
(about US$902.2 million) for a 24-month
period (see Press Release No. 02/14) and was augmented
by SDR 1.16 billion (about US$1.76 billion) on June 25, 2002
(see News Brief. No. 02/54),
and by SDR 376 million (about US$571 million) on August 8, 2002
(see News Brief. No. 02/87).
In commenting on the Executive Board decision,
Agustín Carstens, Deputy Managing Director
and Acting Chair, said:
"Uruguay's performance under the Stand-By Arrangement has
been solid. The economic recovery has been stronger than
expected, with a strengthened outlook for debt sustainability,
much improved financial indicators, and sound prospects for
2005, which reflect the authorities' strong policy
implementation under the program, as well as relatively
favorable external conditions.
"The authorities have reaffirmed their commitment to
preserving the stabilization and reform gains through the
political transition. In particular, they are committed to
achieving a higher-than-programmed primary fiscal surplus this
year, and to pursuing vigorously their successful reform agenda
in the banking sector. The strong fiscal outcome expected for
2004 will facilitate the achievement of fiscal targets next
year. To further strengthen the outlook for medium-term public
debt sustainability, steps are being taken to strengthen
revenue administration and the institutional budgetary
framework. It will be important that these and other pending
fiscal reforms, such as tax and pension reform, be taken
forward by the next government.
"Monetary policy is being conducted in a prudent manner,
appropriately aiming at gradually reducing inflation further.
The central bank should take advantage of the strong
balance-of-payments situation to bolster its international
reserves further, in anticipation of the large medium-term debt
service obligations coming due over the next few years.
"Bank restructuring and asset disposals are moving forward.
BROU's restructuring plan is advancing, with the bank showing
profits and reduced operating costs. The BHU is also making
progress in strengthening its operations, but important
underlying weaknesses remain, and timely implementation of the
reform program being supported by the World Bank is essential.
The liquidation of the assets of the failed banks is under way,
and steps are being taken to ensure transparency and good
governance of the liquidation funds. The authorities should
continue to refrain from granting any further compensation
schemes to bondholders and large depositors of the liquidated
banks," Mr. Carstens said.