MercoPress. South Atlantic News Agency

Uruguay discussing three year program with IMF

Uruguay will be concluding a three year agreement with the IMF April 14/17, in Washington announced this week Uruguayan Economy Minister Danilo Astori.

Mr. Astori and Andrew Wolfe head of the IMF delegation visiting Uruguay said they were satisfied with progress on the agreement, which usually takes several weeks to draft, but "we have done it in less than two".

The agreement contemplates a 3,5% GDP primary surplus, an annual growth of 6% with an inflation target in 2005 ranging between 5,5 and 7,5%.

"Our objective is to no longer need IMF loans or financial assistance, and make Uruguay walk again on its own without the need of IMF crutches", underlined Minister. Astori.

"The only way for Uruguay to cut off from the IMF is to invest and grow sustainably", insisted Mr. Astori who anticipated a 6% expansion in 2005, following last year's 12,4% rebound.

In the midst of the unprecedented 2002/03 financial crisis following the melting of neighbouring Argentina's economy, the US Treasury and the IMF supported Uruguay with an exceptional 1,5 billion US dollars rescue package.

IMF repayments this year are 465 million US dollars and 1,55 billion US dollars in 2006 of which 785 million US dollars are non negotiable.

Uruguay's GDP collapsed to almost half as a consequence of the 2002/03 crisis and now stands at 15/16 billion US dollars.

Mr. Astori said he was optimistic about the agreement since the "IMF supports our structural reforms proposal".

Reforms are programmed for the taxing system, government managed banks including the Central Bank and several independent pension plans.

However Mr. Astori who so far has proved the strongest minister in the cabinet of Socialist president Tabare Vazquez had to abort an attempt by several legislators of the ruling coalition who proposed a suspension of all legal actions against indebted farmers in US dollars, who were caught in the 2003/04 collapse of the Uruguayan economy and strong devaluation of the local currency.

President Vázquez has been just over a month in office and has a majority in both housed of Congress.