Uruguay

Uruguay has preserved macroeconomic stability in the wake of the turbulence in the region thanks to prudent policies and the accumulation of buffers over the years. The Uruguay peso depreciated since April, but the bond spreads have remained stable. Inflation rose above the 7-percent ceiling—due to the drought and the impact of the peso depreciation. The current budget postponed the achievement of the 2.5-percent of GDP deficit target by one year, to 2020, past the mandate of the current government. While an appropriate counter-cyclical response, additional measures will be needed to achieve the target.