The interdependence between politics and economics
The expert communicator, Federico Fasano Mertens, begins his analysis with a crucial observation: Politics should guide the economy and not the other way around.. However, he argues that currently, economic policies seem to have taken the helm, leaving politics to adapt to their dictates. This framework of analysis is essential to understand how the governments of different parties have managed the country’s economy, and how these economic policies impact the well-being of the population.
From Fasano’s perspective, the economy should serve policies aimed at maximizing the common well-being, rather than being an end in itself. This premise leads to a critical analysis of the performance of the Broad Front and the current Multicolor Coalition governments, evaluating their success in managing the Gross Domestic Product (GDP), investments, exports, fiscal deficit, and external debt, among other indicators.
Economic comparison: Frente Amplio vs. Republican Coalition
Fasano’s analysis, supported by data from the consulting firm and Etcétera Study Center, reveals a panorama of contrasts between the economic efforts of the Frente Amplio and the Republican Coalition. During the 15 years of the Frente Amplio, Uruguay experienced significant growth in its GDP per capita, being highlighted as the most prosperous country in Latin America according to the Legatum Institute, which covers 167 countries and carries out an annual prosperity ranking according to a variety of factors such as wealth, economic growth, personal well-being and quality of life. By comparison, the current Republican Coalition government has faced modest economic growth and a notable reduction in reserves, according to official reports.
One of the most praised aspects of the current government has been its ability to control inflationa merit that does not come without significant costs. Fasano points out that, although inflation has remained within an acceptable range in the last stretch of the administration, this achievement has been accompanied by widespread economic stagnation and a flight of domestic consumption to neighboring countries, especially Argentina.
Reserves and debt: Indicators of economic health
The country’s reserves are another fundamental aspect analyzed by the former director of La República. During the Frente Amplio mandate, the country’s reserves increased significantly, reaching $18 billion.. However, according to Fasano, The Republican Coalition government has generated a decrease of 2,000 million in these reserves, which represents a worrying decrease in the country’s ability to face future economic crises.
Regarding the external debt, Fasano highlights that while The Frente Amplio managed to reduce the external debt from 102% to 44% of GDP, the current administration has increased it to 34,000 million dollarswhich, according to him, represents a significant challenge for the next government. This increase in external debt places additional pressures on the national economy, limiting the country’s ability to attract future credit.
Exchange delay and fiscal pressure
The exchange rate delay is identified by the communicator and analyst as one of the most significant defeats of the current government. The lack of intervention in the exchange market by the Central Bank has led to a notable competitiveness gap, affecting exports and the country’s economic stability. This stagnation in the exchange rate, according to Fasano, has seriously harmed the agricultural sector, considered one of the pillars of the Uruguayan economy.
Besides, The fiscal pressure on Agriculture has increased under the current management. Despite promises to reduce taxes, the fiscal pressure has shown an increase of 14% compared to the figures managed during the Frente Amplio mandate, revealing an indirect tax increase that questions the promised fiscal policies.
Conclusions and future perspectives
In his analysis, Fasano appeals to the need for a change of approach in economic policies. With a critical outlook, it raises a necessary reflection on the direction that economic policies should take to ensure the well-being of the Uruguayan population. With elections imminent, the legacy of economic policies plays a crucial role in voters’ decision.
For the future, the promise of an “economic miracle” like the one experienced at the beginning of the Frente Amplio’s mandate is presented as hope. However, Fasano warns that, regardless of which political party wins in the elections, the incoming government will have to face important economic challenges derived from the current administrationultimately urging a strategic rethinking that will put Uruguay back on the path of growth and prosperity.
