In the year 2023Uruguay experienced a public deficit of 3.08% of the Gross Domestic Product (GDP), which placed the country in 101st place out of a total of 192 nations in the deficit ranking, ordered from lowest to highest. This figure shows a deterioration compared to 2022when the deficit was established at 2.55% of GDP and the country was ranked 87th.
In absolute terms, the fiscal deficit reached 2,197 million euros in 2023marking an increase compared to the 1,696 million euros of the previous year. During this same period, Uruguay’s GDP stood at 71,415 million euros, which represents a growth of 4,837 million euros in relation to 2022. It is important to note that variations in GDP have an inverse effect on the relationship between the deficit and GDP.
Looking to the future, the report of the Ministry of Economy and Finance (MEF) points out that the payment of interests of the Central Government and the Social Security Bank (GC-BPS) remained in the 2.4% of GDP, the same as in the previous month. In addition, a deficit was reported 0.2% of GDP in the results of Public Companies, which means a reduction of 0.1% compared to July, mainly attributed to the increase in crude oil and derivatives inventories by ANCAP.
In Augusthe Non-Monetary Public Sector (SPNM) showed a deficit of 3.4% of GDP, while the global result of the Central Bank of Uruguay (BCU) stood at -0.9%, remaining stable compared to the previous month. The global fiscal deficit reached 4.4% in August, a figure that, excluding the income of the Social Security Trust (FSS), returns to the levels observed before the pandemic, similar to those recorded at the end of the second term of Tabare Vazquez.
For the rolling year ending in August, the consolidated deficit showed an increase of one tenth, while the observed result (not including the FSS) was 4.3% of GDP. In the twelve months ended August 2023the result of GC-BPS It stood at a deficit of 3.4% of GDP. If FSS revenues are excluded, the fiscal result stood at -3.6% of GDP.
GC-BPS revenues remained at 27.4% of GDP, without significant changes compared to the previous twelve months (July) where they fell by 0.03% of GDP. This value represents the maximum in the last 25 years. According to the projections of the Accountabilitythese revenues are expected to close to around 28.0% of GDP.
Regarding the projections for 2024it has been reported that the government could fail to comply with two of the three pillars of the tax rulean announcement that was made in February when the fulfillment of fiscal goals for the fourth consecutive year was reported, although with controversies surrounding modifications to objectives to achieve them.
The Fiscal Advisory Council has also indicated that the projections for 2024 are worrying and there could be deviations in some of the pillars of the fiscal rule. According to the Accountability 2023 presented by the MEF, the potential fiscal slippage could result from a drop in structural revenues and lower nominal GDP, caused by a reduction in inflation relative to expectations, a contraction in real GDP due to the 2023 drought and the recent review of the national accounts by the BCU corresponding to the years 2018 until the third quarter of 2023.
