MercoPress. South Atlantic News Agency

Uruguay pledges strict adherence to debt payments

Uruguay will “strictly” comply with its foreign debt obligations in 2003, Economy and Finance Minister Alejandro Atchugarry said Friday.

In the coming year, Uruguayan President Jorge Batlle will work on several programs to reduce the size of government, as demanded by the major industrial, trade, export and service associations, he added.

Atchugarry also said the details of proposed tax reforms would be announced shortly. Next year, Uruguay will have to make $1.6 billion in payments on its $11.4 billion debt, which rose in July when the International Monetary Fund gave Uruguay a $1.5 billion stand-by loan to help the country navigate its worst financial crisis ever.

On Friday lawmakers approved a plan to merge three major banks facing bankruptcy. The move is seen as an effort to free up additional IMF disbursements that were put on hold earlier this month in response to the government's failure to address problems in the banking sector.

The three Montevideo-based banks shuttered their doors in August after a rush on deposits prompted the government to shut down the financial system.

A few months earlier, panic-stricken account holders began withdrawing millions of dollars from the nation's banks, forcing the government to close financial institutions.