MercoPress. South Atlantic News Agency

IMF support for Uruguay's debt restructuring program

International Monetary Fund officials have openly supported Uruguay's economic program and the voluntary exchange program currently under consideration by creditors.

"We have been quite and remain quite supportive of Uruguay's economic program, and I think that was most recently reflected in a letter by the Managing Director Horst Köhler to the international financial community, --that is commercial and investment banks--, expressing our recognition of the positive goals and intent of the debt exchange that is presently underway", said this week in Washington IMF External relations Department Director Thomas Dawson.

"As far as the debt exchange goes, its successful completion with a higher participation rate would help achieve the goals of eliminating the near-term financing gaps and the medium-term debt?and improve the medium-term debt sustainability, which is a core goal of the stand-by arrangement".

On April 10 IMF, Managing Director Horst Köhler addressed a letter about Uruguay to Members of the Financial Community stating: "The Uruguayan authorities' economic program for 2003 contains continued macroeconomic adjustment and structural reforms that set the conditions for a sustained recovery of growth and a viable external position. A key element of the program is the authorities' commitment to raise the primary fiscal surplus to 3.2% of GDP in 2003, and further to 4% of GDP over the medium term, to assure sustainable debt dynamics. The authorities are also pressing ahead with restructuring the banking system and are putting in place other structural reforms to enhance the productive potential of the economy. Their economic program is being supported by exceptionally large use of Fund resources as well as assistance from the World Bank and the Inter American Development Bank.

"In addition to continued support from international financial institutions, the success of the authorities' program will depend on the participation of Uruguay's private creditors. The authorities have announced a comprehensive debt exchange offer that aims at two key objectives: (i) to provide sufficient cash flow relief in order to eliminate any residual financing needs over the next few years; and (ii) to achieve a sustainable debt and debt service profile over the medium term. Achieving these objectives is a condition for completion of the next (third) review under Uruguay's stand-by arrangement. A successful debt exchange requires high participation to allow the program to go forward and the forthcoming review to be completed.

"The Uruguayan authorities are aware of the substantial challenges ahead, and have reaffirmed their determination to address the economic imbalances and deepen structural reforms in order to put the economy on a path of sustained growth and financial stability. I believe that their program represents a strong and balanced effort to achieve these goals. The support of the financial community, including institutional and retail investors from the private sector, is essential to the success of this program."