MercoPress. South Atlantic News Agency

Uruguay repays IMF 900 million US dollars

Uruguay announced Friday the advance repayment of 900 million US dollars to the International Monetary Fund, which represents an overall saving of 40 million US dollars in interests.

Finance Minister Danilo Astori said that the 900 million US dollars matured in 2007 and leaves total debt with the IMF in one billion US dollars.

"Of the 900 million cancelled, 630 million had an interest rate of 8.22% and 270 million, 7.21%", indicated Mr. Astori who underlined the Uruguayan policy is to take advantage of the current global liquidity exchanging expensive, short term debt for long term and lower interest rate papers.

Last February Uruguay repaid the World Bank and the Interamerican Development Bank 436 million US dollars plus another 630 million US dollars to the IMF in March.

"The partial debt cancelling was done with international reserves which Uruguay has deposited at 5%, so it's an overall excellent deal for the country", added Mr. Astori.

He underlined that the savings from the current operation can be estimated in 15 million US dollars, which together with the other cancellations and advance payments to multilateral institutions, add up to 40 million US dollars, "an interesting figure for a country which has a significant social debt".

Astori recalled that earlier this week Uruguay floated 500 million US dollars in global bonds and "today we've cancelled 900 million US dollars which represent a 400 million US dollars drop in the gross debt of the country".

Similarly important, "we've exchanged short term debt which matured in 2007 for long term bonds maturing in 2022 plus changing conditioned debt for sovereign debt", underlined the Uruguayan Finance minister.

"With this operation the twin towers of 2006/07 maturities have been removed and Uruguay has been freed of short term financial restrictions", said Astori who pointed out that "the country is rapidly recovering its international standing in financial markets".

Following the 2001/02 meltdown of the Argentine economy a run on the banking system of neighbouring Uruguay left the country with less than half its deposits. An IMF/US Treasury emergency operation rescued Uruguay but the country ended with a foreign debt larger than its GDP with a ratio over 110%.

Since then the economy has vigorously recovered and Uruguay has meticulously repaid credits plus interest and is now beginning advance payments to decrease financial exposure.

An enthusiastic Astori said that so far Uruguay has floated debt in "foreign currency, US dollars and Euros", and in a not too distant future he forecasted the country would float "not domestic but global bonds in Uruguayan currency".