Uruguay’s budget deficit soared to 3% of GDP in the twelve months to the end of October, the highest since November 2003, (3.1%) when the country was recovering from the financial crisis which spilt over from Argentina. The deficit also exposes Uruguay’s precarious power generating situation.
According to the Ministry of Economy and Finance the fiscal deficit in October was 0.1 percentage point higher than a year ago, confirming the growing misbalance tendency in the last eighteen months. The primary deficit of the non financial sector also was negative, 0.3% of GDP in the year to October.
The Ministry has already increased twice this year the deficit estimate, first from 1.2% to 1.7% of GDP when the annual budget and again in October to 2.2% of GDP. Since there are two months left to complete year the overall deficit will be 0.7 percentage point above the 12 month estimate.
However it must be pointed out that the public sector deficit in 2011 reached 0.92% of GDP, which means that in less than a year it has trebled.
Expenditure in the last twelve months has soared because of insufficient rainfall and the consequent need to generate electricity with thermal units fed on imported fuel. The over-cost so far this year has been 600 million dollars (equivalent to 1.2% of GDP) out of the 1.5bn earmarked by the country’s power company under state control, UTE, and which is a historic record. Since 2005 insufficient hydraulic power has been unable to meet increasing demand and has cost Uruguay over 3 billion dollars in fuel.
Another issue which absorbs a great chunk of the Uruguayan budget is the pensions’ managed scheme and its huge deficit, and on this occasion increased by devolutions on a new public health scheme and payments to bank depositors from the 2002/2003 crash.
In numbers the deficit was equivalent to 1.444 billion dollars in the last twelve months to October; 65 million over the previous month and a billion dollars compared to last December.
The Uruguayan pensions’ scheme remains a heavy weight for the national budget and together with current expenditures absorbs 25.9% of GDP equivalent to 12.6bn dollars.
Other outlays such as interest payments and central government and state enterprises investments remained stable at the same levels as in previous months at 2.7% and 3.2% of GDP.
On the side of revenue figures remained almost unchanged in the twelve months to October, 28.7% of GDP equivalent to 13.9bn dollars. Furthermore during October state owned companies improved their performance compared to September and were able to contribute to the national treasury with 38 million dollars compares to a negative 117 million in the previous months.
Power company UTE reported profits of 21.2 million in October; the fuel refining and distribution company Ancap posted 18.1m and the telephone company Antel, 12.3 million dollars. The railways system was just balanced but the waterworks OSE lost 9.7m; the ports administration, 4.3m and the Housing Department, over half a million dollars.