MercoPress. South Atlantic News Agency

Uruguay's 12 month fiscal deficit to August: 0.4% of GDP

In spite of booming Uruguay has yet balance its budget

Uruguay's consolidated fiscal deficit in the twelve months to August was 0.8% of GDP, which means it has remained relatively stable (July 0.9%), according to official data from the Ministry of Economy.

But it is also a warning call since the Uruguayan economy has experienced sustained growth for the past six years, averaging 7%, and the international context is now becoming increasingly adverse. However the Uruguayan government is keeping to its original target of a 0.4% fiscal surplus for the twelve months of the current year. Apparently confidence is born from the fact the government last December was forced to make "only time payments" to two debt-strapped institutions equivalent to 0.5% of GDP, "which will not figure in the 2008 budget numbers". Furthermore the so called budget primary surplus (before payment of public debt interests) in the twelve months to August was 2.2% of GDP, the same percentage as in the twelve months to July. This was because revenue and outlays have "more or less" stabilized so there should be "no surprises" for the rest of the fiscal year, according to the new Economy minister Alvaro García. Budget outlays and revenue in the twelve months period to August were equivalent to 27.2% and 25.3% of GDP. During August tax revenue increased and so did social security contributions, (0.07% and 1% of GDP), which helped compensate a drop in foreign trade duties and lesser transfers from government owned corporations which under Uruguayan law must turn in profits to the Treasury. On the outlays side there were greater payments of social security benefits. Furthermore interest payments on government public debt jumped in August to the equivalent of 3.1% of GDP, which was 40% higher than in July. Another negative factor has been government owner monopolies (basic services) which in eight months have lost 260 million US dollars, mainly because of the government's policy to soften the impact of soaring energy prices at the fuel pump and in home electricity bills. During the first eight months of 2008, UTE the government's electricity company experienced a deficit of 318 million US dollars and the oil company Ancap, 28 million US dollars. Telecommunications on the positive registered a surplus equivalent to 48 million US dollars and Uruguay's main bank (government owned) transferred 30 million US dollars in profits to the Treasury.