Tag: Fernando LorenzoFernando Lorenzo
Uruguay announced on Thursday new measures to discourage short term speculative capital inflows that have appreciated the Peso, eroded the country’s international competitiveness, made imports cheaper than domestic production and threaten an already stubborn inflation.
Relations inside the Uruguayan cabinet remain tense with some ministers in non-talking terms even when President Jose Mujica cancelled the Monday full ministerial turnout for three specific areas, security, social affairs and production meetings, which function every two weeks.
“The Uruguayan government is in deep crisis” admitted President Jose Mujica following an open clash between ministers that called for an urgent meeting of the cabinet and half way had to be adjourned on fears that recriminations could get out of control. A recess was ordered but the squabbling through the press continued and the exposed deep rift remains more than a challenge.
Two contrasting views have surfaced in the Uruguayan government regarding inflation which has been steadily climbing and seems so far immune to monetary tools, but is now the second highest in the region behind Argentina.
Uruguay’s budget fiscal deficit soared to 1.35 billion dollars or 2.8% of GDP last year, the highest since 2003, propped by energy costs, extraordinary one time payments and support for the recently implemented national health scheme, according to a release from the Ministry of Economy.
Uruguayan supermarkets pledged to help the government of President Jose Mujica to keep inflation below 10% at the end of the year even when in the first nine months of the year it reached 8.64%.
The Uruguayan economy experienced a slight deceleration in the second quarter of this year, but with an overall positive evolution. GDP increased 0.8% over the previous quarter and 3.8% over the same quarter a year ago, according to the latest release from the Central bank.
Uruguay's central bank said on Monday it will raise marginal reserve requirements on local and foreign currency deposits from Aug. 1 as part of its efforts to bring inflation within the official target range.
The Uruguayan economy is set to grow 3.57% in 2012 which is below the government’s forecast according to the latest analysts and businesspeople poll published last Friday by the central bank.
Uruguay’s Economy minister Fernando Lorenzo expressed concern about the deteriorating indicators from the Argentine economy which could have a negative impact on the country’s activity.