MercoPress. South Atlantic News Agency

Uruguay's fiscal deficit steady at 1.6% of GDP; lack of rains fuels power bill

Economy minister Lorenzo, “with no rains the situation will worsen”

Uruguay’s fiscal deficit increased 0.7 percentage points of GDP in April reaching 1.6% of GDP in the accumulated twelve months, reports the Ministry of Economy and Finance. The 1.6% of GDP is the fiscal budget deficit target established by the government for the whole of 2011, which was recently increased.

In the twelve months to April the global public deficit (including regional governments and the Insurance Bank) totalled 677.7 million USD. This represents an increase of 357.4 million USD over the twelve months to March, or a 112% jump.

Non financial revenue in April was down 0.4% of GDP compared to March and totalling 28.3% of GDP. The fall in revenue is mainly because of a poor primary performance of the government corporations, particularly greater outlays and costs from the power company.

Economy Minister Fernando Lorenzo said that it is clear that “if we don’t have rains the situation will worsen” and will be reflected in the government’s numbers.

Uruguay’s power is mainly hydroelectric and there have been insufficient rainfall. However the Uruguayan government facing a surge in inflation has been delaying increases in public utility rates as well as in fuel, which are government monopolies and are ruled by administrative prices.

According to Uruguayan government data in the first four months of 2011 the power generating corporation, UTE spent 307 million USD in thermal and imported electricity, which is equivalent to 52% of the contingency fund for the whole year.

Another factor is the mismatch of Holy week which in Uruguay is a five day holiday for government employees and in 2010 the week was in March, and this year in April with impact on both outlays and revenue.

During April the government corporation with best results was fuels and cement ANCAP with a 107.8 million USD surplus, followed by the telephone company Antel, 13.6 million USD and water works OSE, 3.6 million USD.

At the other end government corporations with negative results in April include UTE with losses of 42.2 million USD; the ports authority ANP, 2.3 million USD and the railways, AFE, 0.2 million USD.