Uruguay

Uruguay recorded a strong macroeconomic performance in the past years. In 2011, Uruguay saw the ninth consecutive year of economic expansion since its 2002 crisis. This... Show More + marked one of the longest growth periods in the country's history. Social indicators continue to improve and the unemployment rate is historically low. Fiscal policies have contributed to the strong macroeconomic performance and improvements in social indicators. Continued prudent fiscal policies coupled with the debt restructuring and significantly improved debt management following the 2002 crisis contributed to the macroeconomic stability of the country. Uruguay has therefore successfully addressed a number of challenges faced in the past. There are however a number of policy-driven and exogenous factors that will affect fiscal space over the longer term. In addition to the effect of climate variability on fiscal costs of energy policies, significant changes in the social protection and health sectors are a critical factor to consider in fiscal planning. The combination of an ageing population with recent increases in pension eligibility presents an increasing fiscal challenge. However, Uruguay has been trying to address this emerging problem, while also protecting those who are vulnerable. The most recent social protection reform in 2008-2009 facilitated access to pension benefits for old-age low-income households. In addition in 2007 the parliament approved a comprehensive health reform program to create a more harmonized health care system and to improve equity in access to health services. Show Less -

The development goal of the Public Sector Management and Social Inclusion Development Policy Loan (DPL) Program for Uruguay is to support the development and implementation... Show More + of policies aimed at strengthening resilience to external shocks and improving growth opportunities, with a focus on poor and vulnerable groups. This DPL for US$260 million is to be implemented as a single operation with a Deferred Drawdown Option (DDO). Uruguay recorded a strong macro economic performance over the past nine years. Real gross domestic product (GDP) growth averaged more than 5 percent per year in the period the 2002 debt crisis. The year 2011 was the ninth consecutive year of GDP growth, marking one of the longest growth periods in the country's history. Prudent macroeconomic policies, improvements in structural areas and favorable external economic conditions, such as buoyant demand for its main export products and a booming regional economy, have contributed to the strong economic performance of Uruguay and helped protect the economy during the 2008/2009 crisis. Private consumption continues to be the main driver of the economy. As in previous years, with the exception of 2009, when GDP growth was driven by the external sector, private consumption was the main driver of economic growth. Private consumption grew by 7.6 percent in real terms in 2011, accounting for 6.1 percentage points of total growth. Gross domestic investment, fueled by still high levels of foreign direct investment (FDI) inflows (4.7 percent of GDP in 2011), grew by 7 percent and explained 1.4 percentage points of GDP growth. Similar to previous years, the contribution from the external sector was negative, reducing GDP growth by 2.1 percentage points. Show Less -

The objective of the Third Basic Education Quality Improvement Project is to increase equity, quality, and efficiency in providing preschool and primary education. The... Show More + reallocation is necessary to finance: (i) existing and newly created additional in-service teacher training courses, which require (a) additional expenditures such as the per-diem and travel cost of the trainees, rental of facilities, seminar or workshop materials, and administrative support, and (b) the contracting of more teacher trainers than estimated at the beginning of the Project; and (ii) additional technical advisers hired to work in the preparation and supervision of works at full-time schools. Show Less -

This project paper provides an additional loan to the Oriental Republic of Uruguay for the Third Basic Quality Improvement Project, including the extension of the project's... Show More + closing date by 36 months from December 31, 2009 to December 31, 2012, to allow for the completion of the project activities and the achievement of the project targets. The additional financing will address the financing gap arising from the increase in project costs associated with a change in the Government of Uruguay's (GoU) strategy on civil works, and the significant escalation of construction costs in the country. The new civil works strategy will ensure that the Project Development Objectives (PDO) target of 47,000 new student places in Full Time Schools (FTSs) will be met. No changes are to the design or implementation arrangements of the project. The additional financing will continue to finance ongoing activities including: (i) the construction, rehabilitation and equipping o f schools; (ii) the procurement of didactic materials (school equipment, learning materials, and school libraries); (iii) teacher training for FTS; and (iv) project management. Show Less -

The Poverty and Social Impact Assessment (PSIA) analyzes the impact of the tax reform, which came into effect in July 2007, on tax incidence and poverty in Uruguay.... Show More + The essence of the reform is the introduction of a dual personal income tax, which taxes labor income at progressive rates and capital income at lower, proportional rates. A further modification is the reduction in the revenue share of indirect taxes. The study aims to provide information to inform policy discussion on distributional implications of tax reform. In addition, it gives impetus for further more sophisticated analysis of current and proposed tax reforms. In designing a tax system, a trade-off exists between efficiency, equity and administrative simplicity. The paper focuses on one aspect of this trade-off by evaluating the equity impact of the tax reform in Uruguay. Neither the efficiency of the post-reform tax system nor the effect on tax administration is examined. Assessing the distributional impact of a tax reform is important, firstly, as there is a potential to mitigate the equity-efficiency trade-off in the design of tax structures, and secondly, as the expenditure side of the budget can then be employed to diminish any adverse distributional impacts. Show Less -