Monday, December 3rd 2012 - 20:49 UTC

Uruguay budget deficit trebles in twelve months and soars to 3% of GDP

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.

The power generation bill and the pensions’ scheme are a heavy burden for the Uruguayan treasury

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.

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1 Britworker (#) Dec 03rd, 2012 - 09:10 pm Report abuse
I think South America is starting to find out they are not immune to the worlds financial crisis. Brazil's economy is slowing down rapidly and they have been ordering lots of shiny new things from the catalogue that they may not be able to afford.
2 redpoll (#) Dec 03rd, 2012 - 11:28 pm Report abuse
Yes unfortunately Uruguay has not put anything under the matress for a rainy day and this business trying to refloat PLUNA is just money down the drain which we can ill afford
3 ChrisR (#) Dec 04th, 2012 - 05:13 pm Report abuse
@2 redpoll

And I remember a certain poster castigating me for putting forward some heavy constructive comments regarding the poorly run monopolies of the government. :o)

But the real problem remains: the GOVERNMENT have not got hold of the problem by the roots. If fact, I don't believe there is ANYONE in the present setup that has the intellect, knowledge and education to fill the bill.

I am fed up commenting on Pluna, the morons dealing with the 'sale' missed the chance to settle at USD 200M due to Pepe thinking he had pulled a stunt to make money on selling the routes AFTER the sale, and now they are going to lose OUR shirts, not theirs.

Pepe's USD 12.500 per month out of his remuneration which he gives to charities won't go very far will it?

Anybody heard of his real gem lately - the deep sea port? Seems to have gone quite, I wonder if the Chin are seeing the writing on the wall after all THEY are not stupid. We really need this facility to kick start the economy.
4 redpoll (#) Dec 04th, 2012 - 06:58 pm Report abuse
See the news about CARP today? What a disgrace
5 ChrisR (#) Dec 04th, 2012 - 09:48 pm Report abuse
4 redpoll

Anything Almagro does will always be with his 'friends' in RG in mind.

Anything been done yet about his little scam with luxury cars? I bet not.
6 ynsere (#) Dec 09th, 2012 - 04:07 pm Report abuse
Hi ChrisR @ 5
I'm in São Paulo at present, and haven't heard about Almagro's scam with luxury cars. Please tell me more. What I did see in O Estado de São Paulo was an article about President Mujica's midday drinking and subsequent remark about the wives of the Blanco leaders. Also the possibility of Calloia ending up in the clink.
7 ChrisR (#) Dec 09th, 2012 - 08:27 pm Report abuse
6 ynsere

Apparently, when Almagro was the Ambassador to AG, he brought several luxury cars (mainly top-end Audis) over from UYU free of all import and other taxes (of course) and sold them to 'influential' people in the AG government mainly.

It was quietly hushed up and I have forgotten which publication ran it: maybe Clarin, it was just after I had my main computer operational so that would have been June 2011 or so. Have not heard anything since, but that does not surprise me.

I must admit I think Pepe is ill, there is something lacking in his demeanour somehow. One of my fellow directors in the GEC company I was at always had the smell of mints on him. He was out on business one day and his second-in-charge needed something from his office. He found four bottles of gin, two empty and two full. It transpired he was in real bodily pain and the painkillers he was taking from the doctor couldn’t dull it: he had terminal cancer. Hope this is not the case here.

Do you mean Fernando Calloia, the President of BROU? Haven’t seen anything, do tell.
8 ynsere (#) Dec 10th, 2012 - 05:57 pm Report abuse
Hi ChrisR @ 7
I don't think Almagro has ever been appointed ambassador, in BA or anywhere else. I seem to remember complaints that he was promoted to Minister of Foreign Affairs over the heads of more senior professional diplomats, as a reward for political toadyism. Perhaps you're thinking of Bustillo: he was accused by the Argentines of irregularities regarding importation of luxury cars when he was the Uruguayan ambassador in BA. Apparently the Argentine courts dismissed the charges, and then refloated them when Bustillo spilled the beans about what was going on in CARU (the binational river authority).
The gist 0f the article in the São Paulo press yesterday was that the reinsurers refuse to pay the now-famous 13 million dollar guarantee for the Pluna auction because of irregularities in Banco República, including the name of the beneficiary. The article went on to say that Calloia may be indicted for fraud.
9 ChrisR (#) Dec 10th, 2012 - 06:39 pm Report abuse
8 ynsere

YES! That was it (about the cars). The thing with Almagro was his love of all things AG with some accusers saying to the detriment of UYU. Thanks for clarifying that for me.

I am not at all surprised about the reinsurers refusing to pay USD 13M for what was clearly a complete fiasco by everybody involved at the government level. The question is: was the beneficiary the government of UYU, represented by the Finance Minister (for example). Surely it wasn’t some named person remote from the government; even BROU would be unacceptable to most people. I suppose a case could be made for the sovereign creditors / underwriters of Pluna should have first call on any monies coming to Pluna, not the government (unless they were the principal creditors).

Obviously, without seeing the written details of the BROU ‘irregularities’ I find it strange that the head of BROU could even be indicted for fraud on the basis of someone giving a false name. It all depends on who, if anyone, was supposed to do the due diligence: it seems no one did.

From the previous publications I would have thought the Argentino who owns Burquebus was more in the frame, wasn’t the character who made the bid a former senior manager for him?

The nonsense surrounding Pluna shows Pepe, especially, in a very poor light from the beginning to the end. But the whole retinue have serious questions to answer beginning with the Minister for Public Works! For the life of me I cannot understand how a bunch of road sweepers were involved, even if they maintained the airport, PLEASE tell me he wasn’t in charge of plane maintenance.

I do hope the planes are being kept in hangers and out of the sun and the tryes kept inflated, engines spun up regularly etc., but why do I doubt it?
10 ynsere (#) Dec 10th, 2012 - 09:34 pm Report abuse
Hi ChrisR @ 9
The Bombardiers are already back in Canada. Pluna was terribly mishandled by the government, for years. Matters pending: unpaid fuel bills, unpaid salaries and associated levies, Varig lawsuit, the unknown bidder at the auction who was not required to provide ID, the reinsurance bond, BROU's haste in issuing the guarantee, the authorities' fibbing and stonewalling at parliament. Who knows what else will arise? The good news: Uruguay's free press and opposition are doing their jobs. The bad news: It's not a good idea to give people top level jobs on the basis of political standing rather than expertise.
I've just had a look at the internet version of El Pais (I'm abroad at present). Seems the story about BROU and Calloia has been picked up by the Blancos.
Our President? I suspect he's lost control of himself and his subordinates.

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