Central Bank of Uruguay in critical financial situation
He Central Bank of Uruguay (BCU) is in a critical situation, as announced by the Ministry of Economy and Finance (MEF). The bank’s equity has decreased significantly, so the Executive branch must capitalize the entity in 2023 to comply with the provisions of the law.
Article 8 of the law of the Organic Charter of the Central Bank of Uruguay establishes that the capital of the bank must be $28 billion (Uruguayan pesos).but at the end of 2022, BCU’s equity was negative for $8,055 million, which means a decrease of $55,777 million compared to the previous year.
The BCU with reserves below the minimum
This critical situation is worrisome, since the bank is below the minimum provided by law, which means that the Executive Power must present a capitalization plan for the year 2023. Uncertainty and nervousness in the Uruguayan financial market are palpable, and the details of the capitalization process are expected to be communicated in the coming weeks.
The losses of the BCU in 2022 were significant, especially due to the difference in the price of foreign securities and the exchange difference losses, which reached $11,772 million and $39,547 million, respectively.
The details of the capitalization process will be communicated in the course of the following weeks, both entities added in the joint statement released in the last few hours.
