The Ministry of Economy and Finance (MEF), presented this Wednesday in Torre Ejecutiva a report on the situation and theThe macroeconomic perspectives of Uruguay. This public instance that was held for the third consecutive year is planned within the new fiscal institutionality that created the Law of Urgent Consideration (LUC).
The presentation, which lasted just over 45 minutes, opened with the estimated activity growth figure for 2022, which is projected at 5%, above the initial estimate of 3.5% in the last Accountability.
Activity, consumption and exports
The Minister of Economy and Finance, Azucena Arbeleche, highlighted the positive performance during the last year of exports of goods and services, of the investment and household consumption. “Let’s hope it continues as real wages begin to recover,” he said. He also mentioned the “positive” evolution of the investment.
“The great uncertainty is the impact that the drought is going to have in the fourth quarter of 2022,” he said. The final data for 2022 will be published on March 23 by the Central Bank of Uruguay (BCU).
On the other hand, he maintained that last year Comap received investment projects for US$ 2,573 million. “Beyond the large investment by UPM, it is a very significant figure for the rest of the private sector. These projects would be generating some 8,200 jobs if they are fully implemented, ”he indicated.
According to the minister, “greater activity” translated into more employment, with “a strong labor market”. (…) We have 40,000 more busy people in 2022”, he stated. In addition, he stressed that the “significant” increase in the number of contributors to the Social Welfare Bank (BPS) shows that these jobs were created within the formal economy.
Income
Regarding the evolution of wages, He pointed out that the recovery of wages is “underway” and will be “consolidated” in the coming years. “We are starting the recovery phase. After a first phase where the focus was on employment and the result was good, we added the focus of real wage growth”, insisted the minister.
“The growth of the Product, the greater employment, the recovery that begins in the real wage and the targeted transfers that were given allow us to continue working to continue reducing poverty,” he added. On this occasion, the minister did not use figures and said that the data for the second half of 2022 will be released next month.
On the other hand, during the presentation the minister detailed the structural reform agenda that the government is carrying out. Among them, she mentioned the early childhood support plan, the “educational transformation”, the housing plan for settlements and the social security reform.
fiscal goals
The head of MEF dedicated a good part of her presentation to the fiscal situation. In the first place, she reported that the fiscal result of the Central Government-BPS (GC-BPS) was 3.2% of GDP, in line with what had been estimated in the Accountability.
Arbeleche explained that beyond the effective result of every month, when making economic policy decisions the government is based on the new fiscal institutionality.
In that sense, the fiscal rule was once again complied with in its three pillars during 2022 and “without tax increases,” said the minister.
The structural result included in the Rendición de Cuentas was a deficit of 2.6% of GDP, and finally it was 2.4%.
He primary spending growth ceiling was 2.1% -which is the potential growth of the economy- and finally that result marked a decrease of 0.5%. This comparison takes into account the expenses of the Covid Fund, which were lower compared to 2021.
And the The debt ceiling, which was US$2.1 billion as established by law, was US$1.813 billion at the end of the year.
“This is extremely important for the government, it is a mandate by law. This allows us to have conduct, discipline, and today we are in a comfortable situation to face the uncertainty that may come as it did in the past when we faced the pandemic,” said the minister.
With respect to the evolution of public debt in relation to GDP, a slight drop was recorded in 2022. “It is important to highlight that interest in terms of Product is still half a point below 2020. This means that we have more resources to allocate to public policies that are the decision of the Executive Power”, he stated.
projections
The estimated growth for the economy in 2023 is 2%. This figure is subject to the uncertainty generated by the impact of the drought on the agricultural sector.
Associated with this expected figure, it is estimated that an average of 12,000 jobs will be created during the year.
Meanwhile, the projected fiscal result in 2023 for GC-BPS is 2.6% of GDP. And the structural fiscal result is projected at -2.5% of GDP.
“The responsible exercise of fiscal accounts is what allows us to face adverse events and present the tax relief that the president will announce in the coming days. (…) “Macroeconomic stability and responsible administration generate direct benefits for the people” , concluded the minister.
