Uruguay

Uruguay stands out in Latin America for its strong institutions, high per capita income, and some of the lowest levels of poverty and inequality in the region. More than 60% of its population belongs to the middle class —the region's largest share.

Nonetheless, the country faces structural challenges, including educational outcomes below those of countries with similar income levels, limited global integration, and significant vulnerability to climate shocks.

Poverty rates are twice as high among children, adolescents, and Afro-descendant communities. While inequality is low for the region,  it remains high compared to peers in other high-income regions.

Uruguay has also emerged as a pioneer in innovative climate finance, working with the World Bank to develop the world’s first budget support loan that links interest payments to the achievement of ambitious climate goals.

Following a severe banking crisis in 2002, prudent macroeconomic management and favorable external conditions supported a prolonged period of economic expansion. Since 2015, however, growth has moderated, reflecting lower commodity prices, the COVID-19 pandemic, and climate shocks, including a historic drought between October 2022 and August 2023.

Despite these challenges, Uruguay has largely maintained prudent macroeconomic policies. This is reflected in the lowest sovereign risk spreads in the region and underpinned by strong institutional quality.

After the drought reduced growth to 0.8% in 2023, the economy rebounded by 3.1% in 2024. Growth moderated to 1.8% in 2025, driven mainly by exports and private consumption, both of which lost momentum in the second half of the year amid a more challenging environment.

Growth is expected to slow to 1.6% in 2026, reflecting weaker domestic demand and a less favorable external context, before converging to around 2% over the medium term. Inflation declined to 3.6% in 2025 (below the Central Bank’s target) and is expected to remain within the target range.

This moderation in economic activity poses a relevant challenge for public finances, while also creating an opportunity to strengthen fiscal efforts, consolidate public sector accounts, and stabilize the public debt-to-GDP trajectory.

For more than 80 years, Uruguay and the World Bank Group have built a strong, trusted partnership—one that has delivered innovative, high-impact solutions now regarded as global benchmarks.

A relationship that began in 1950 with a loan to expand telephone services has evolved into a strategic alliance tackling complex challenges, driving the creation of global public goods, and positioning Uruguay as a knowledge hub.

A recent example is the World Bank’s first loan operation linking financing terms to the achievement of environmental targets. Co-created with Uruguay, this groundbreaking approach aims to encourage countries to integrate global challenges—such as climate change mitigation—into their financing and development strategies.

Building on this momentum, the World Bank Group also supported the financing of the world’s largest electric ferry through the country’s first blue transaction, among other pioneering initiatives that reinforce Uruguay’s role as a regional hub for innovation with global impact.

To date, more than 20 countries have drawn inspiration from solutions developed jointly by Uruguay and the World Bank Group, spanning energy, health, and education, as well as sustainable agriculture and livestock traceability.

A major milestone in the partnership between Uruguay and the World Bank Group (WBG) was the establishment of a joint WBG Representation in Montevideo in 2024. Uruguay became one of the first countries to bring together all three WBG institutions under one roof: the International Bank for Reconstruction and Development (IBRD), the International Finance Corporation (IFC), and the Multilateral Investment Guarantee Agency (MIGA).

This integrated model provides a single-entry point to the full range of WBG services (financing, advisory, and guarantees), enhancing coordination and maximizing impact.

In a high-income country like Uruguay, where remaining development challenges are complex and often require “last mile” solutions, this unified presence allows the WBG to combine financing, knowledge, and guarantees to deliver more tailored and effective responses.

The current WBG portfolio in Uruguay totals US$1.07 billion. It includes US$91.5 million from the World Bank for investment projects in education, agriculture, and institutional strengthening; a US$539.3 million MIGA guarantee supporting the financial sector; and US$439.3 million from IFC to support private sector projects that expand access to finance for SMEs, promote sustainable maritime transport, strengthen forestry and food value chains, and advance the country’s first green hydrogen project.