MercoPress. South Atlantic News Agency

Uruguay’s imports plummet for the fifth month running, 41% in May

Energy shortages and prices remain the main challenges for Uruguay’s development.

Uruguay’s imports again plummeted in May for the fifth month running, with the highest inter-annual negative rate, 41%, according to the latest data from the Central Bank released this week.

In January imports fell 33%; February, 8%; March 15% and in April, 41% while imports in May totalled 524 millions US dollars, well below the 953 million of May 2008. In the first five months of this year they declined 33%.

Not taking into account purchases of oil and electrical power, imports suffered an even greater setback in May, particularly the item capital goods which was down 45%, closely linked to a fall in equipments for private sector transport (down 73%). Capital goods are machinery and equipment used in the production of commodities and other goods.

Intermediate goods imports, excluding energy and crude, were down 29% and consumption goods 16%.

In related news fiscal revenue in Uruguay fell in May for the second month running. Although the drop was 1.9% in real terms compared to a year ago, it is beginning to signal a declining tendency.

Uruguayan fiscal officials said the fall could be attributed to lesser tax payments by government owned companies, which during 2008 faced serious revenue shortages to absorb the impact of soaring energy prices.

This is the case of Ancap, which has the fossil-fuels monopoly and did not transfer the whole impact of crude prices to consumers and UTE, the electricity generating monopoly, mostly hydroelectric and had to receive central government support of over 800 million US dollars to import power and contemplate residential bills.

However May’s net tax revenue not taking into account contributions from government owned companies was actually “4.8% higher than the same months a year ago” in real terms.

Uruguay is entirely dependent of fossil fuels and is hydroelectrically self sufficient following rainy seasons.

VAT remains Uruguay’s main source of revenue and according to the official data actually increased 4.8% in May, “although at a slower rate, it is in line with the ascending tendency”.

Corporate taxes revenue dropped 43.5% in May but this is because of the collapse in government owned companies payments (down 227%), while the private sector contribution increased 17.3%, said the official release.

However, income tax which was introduced by the current government, dropped for the first time in May, 11.8% in real terms.